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Heavy hitters are clamoring to grab market share from chipmaker and AI wunderkind Nvidia (NVDA), but they’re facing an uphill battle.
“[An Nvidia chip] is not just a chip,” said Bank of America analyst Vivek Arya during a conversation with Yahoo Finance executive editor Brian Sozzi on his Opening Bid podcast (video above; listen below).
Arya is viewed as a top semiconductor analyst on Wall Street and has been bullish on Nvidia for a long stretch. One strength that Nvidia has is that it offers package deals beyond just the highly touted Blackwell chip, says Arya.
Read more: where Wall Street stands on Nvidia in 2025
Arya noted that a few years ago, tech’s buzzword du jour was 5G (in effect, high-speed phone service). There’s no need to “get frazzled over what may or may not happen in technology three years from now in such a dynamically changing market,” he said.
With giants like Amazon (AMZN) announcing an $8 billion partnership with Anthropic to enter the AI chip space and Google (GOOG) dropping a super computer with an AI chip called Willow, it’s evident big tech companies want in on the action.
Similarly, Broadcom (AVGO) and Marvell (MRVL) have released advanced custom chips, but, “there is no software expertise, no partner to bring enterprise demand to you,” said Arya. “That is the value add that Nvidia has.”
Amid that package deal on tech, Nvidia has room to grow.
The company expects data center sales will have reached $110 billion in 2024, said Arya. Broadcom and Marvell expect data center sales to reach $12 billion and $700 million for last year, respectively, per Arya.
For 2025, Nvidia is expected to grow data center sales to $200 billion while Broadcom should be around $17 billion. Marvell will pull in anywhere from $2 billion to $4 billion, Arya estimates.
“When you look at Nvidia’s market share of whatever’s going on, it is 80% to 85% in the next 12 to 18 months,” he said.
Read more: why Blackwell won the 2024 Yahoo Finance Product of the Year award
One reason the market favors Nvidia is because “in semiconductors, incumbency scale matters,” said Arya. “Unless the incumbent messes up, it is very hard to dislodge them from a market share perspective because they are the ones who get the first call when there is anything short in the supply chain.”
For example, if a company such as Taiwan Semiconductor (TSM) is unable to produce the next generation of chips, or if Hynix (000660.KS) or Micron (MU) don’t have enough memory, “who is going to be their first call,” asked Arya.
“You have to have alternatives in place because that’s just risk mitigation,” he said. “That is just prudent. No doubt about it.”
To plan alternatives, he continued, it requires looking out at the coming two to three years. “When you are investing in custom chips, the advantage you get is the cost advantage,” he said. “You get some more assurance over your own future.”
“I am amused when people say this chip is better than that chip,” he said. “It’s like saying a sitcom is better than Netflix (NFLX) so I can beat Netflix. That’s not the game anymore.”
And it’s a game Nvidia appears poised to continue dominating.
Three times each week, Yahoo Finance Executive Editor Brian Sozzi fields insight-filled conversations and chats with the biggest names in business and markets on Opening Bid. You can find more episodes on our video hub or watch on your preferred streaming service.
Grace Williams is a writer for Yahoo Finance.
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