Introduction
NVIDIA, the reigning giant in the AI semiconductor space, is no longer alone at the top. While still dominating market share, the company is beginning to face significant pressure from emerging rivals — most notably AMD and Broadcom — who are positioning themselves to capture a slice of the multi-billion dollar AI chip market.
With Oracle switching to AMD GPUs and Broadcom launching a new networking chip, NVIDIA’s strategic moat is being tested, sparking questions about how long it can maintain its leadership in such a fast-evolving ecosystem.
Broadcom Unveils Thor 2: A Direct Strike at NVIDIA’s AI Infrastructure
In a bold move, Broadcom recently announced the launch of “Thor 2”, a next-gen networking chip built for large-scale AI computing. Its main selling point? The ability to interconnect hundreds of thousands of AI chips, making it a direct competitor to NVIDIA’s interface technologies in data centers.
Broadcom estimates its AI-related chip market opportunity could reach $60–90 billion by 2027 — a direct reflection of how seriously the company is investing in this vertical.
This development reinforces Broadcom’s intention to not just participate but lead in AI-related infrastructure, especially in high-speed interconnects and cloud data processing.
🚀Oracle Bets on AMD GPUs Over NVIDIA
In another blow to NVIDIA’s tight grip on the AI GPU supply chain, Oracle Cloud Infrastructure (OCI) announced plans to deploy 50,000 AMD AI chips starting in the second half of 2026.
This shift is strategic: Oracle recently signed a cloud deal with OpenAI, previously a flagship client of NVIDIA. The move suggests a clear diversification effort away from reliance on a single vendor, as well as cost and flexibility advantages.
With hyperscalers and enterprise AI clients seeking multiple chip providers, NVIDIA may face tougher pricing pressures and narrower margins over time.
What Do Analysts Say About NVIDIA’s Position?
Despite growing competition, most Wall Street analysts remain bullish on NVIDIA’s future.
- Tom Lee (Fundstrat): Sees current valuation as “attractive” due to continued AI capex spending and a dovish Fed environment.
📎 Source - Bank of America: Reiterates a “Buy” rating, noting this AI boom differs fundamentally from the dot-com bubble. Factors include:
- Higher hardware utilization
- Stable cloud investment cycles
- Real demand from enterprise AI users
“AI isn’t speculative anymore — it’s operational,” says one BofA strategist.
However, BofA also flagged some risks:
- Weakness in the gaming segment (a legacy NVIDIA business)
- Emerging competition from AMD, Intel, Broadcom
- Potential export restrictions on AI chips to China, which could limit overseas growth
Beyond Chips: NVIDIA’s Expanding Ecosystem
NVIDIA isn’t standing still. Its venture arm recently backed Lila Sciences, an AI-focused biotech startup that raised over $1.3 billion in its latest round. This signals NVIDIA’s intent to embed itself deeper into the AI startup world, from chips to applications.
Meanwhile, TSMC, one of NVIDIA’s key chip manufacturers, released positive earnings and production news, boosting investor confidence across the semiconductor space — including for NVIDIA and Broadcom.
📊 Strategic Outlook: Can NVIDIA Defend Its Lead?
The AI chip war is far from over, but NVIDIA is no longer the only player shaping the battlefield.
🧩 Key strengths:
- Dominance in GPU compute
- CUDA software ecosystem (lock-in advantage)
- Deep relationships with hyperscalers like Microsoft and Google
🚧 Key threats:
- AMD & Broadcom encroachment
- Export controls and China tensions
- Dependency on TSMC fabrication cycles
While NVIDIA remains a heavyweight, the next 18–24 months will be crucial in determining how well it adapts to a more competitive and fragmented AI market.
📚 FAQs
Is NVIDIA still the leader in AI chips?
Yes, but companies like AMD and Broadcom are closing the gap with new technologies and strategic partnerships.
Why did Oracle choose AMD over NVIDIA?
To diversify its supplier base and possibly lower costs as demand for AI compute surges.
What is Broadcom’s Thor 2 chip?
A high-speed networking chip designed to connect massive arrays of AI processors — a direct competitor to NVIDIA’s networking stack.
Are analysts still bullish on NVIDIA?
Most major analysts maintain “Buy” ratings, citing strong fundamentals and continued AI demand, despite rising competition.
What risks does NVIDIA face?
NVIDIA’s dominance in AI chips is being challenged as AMD and Broadcom roll out competitive offerings. Oracle’s move to AMD and Broadcom’s Thor 2 launch highlight a shifting landscape, but analysts still see strong upside for NVDA.