Nvidia (NASDAQ:NVDA | NVDA Price Prediction) stock just came off a remarkable week, with shares gaining more than 6%, even amid a pickup in turbulence across some corners of the tech scene. Of course, Anthropic’s latest AI model, Mythos, was deemed too powerful to launch. To quote Uncle Ben from Spider-Man, with great power comes great responsibility. And with Project Glasswing forming this month to help raise the bar on AI safety, it certainly seems like some nervous investors may have underestimated demand for AI, as some opted to sell out of the Magnificent Seven due to their lofty CapEx numbers for the year.
Indeed, Nvidia’s latest rally seems well-deserved, and it might be the start of a breakout if Iran and the U.S. can reach a peace deal while Anthropic continues to show the world that its models have the potential to take the lunch of more than just a few firms.
Last week felt like the start of a breakout moment for Nvidia
While I’d be pounding the table on shares of Nvidia after the latest bounce back to $188 and change, I do think that it’s still worth evaluating the risks that come with betting on a dominant behemoth that’s becoming strikingly cheap, especially relative to its impressive growth. It’s easy to doubt Nvidia and call a peak after doing nothing for the past six months.
Dr. Michael Burry certainly seems to think that there’s an AI bubble. But, at this juncture, it seems like Burry might be a tad too early to call curtains on the AI hardware trade. Though, he seems to be spot on with his bearish bets against Palantir (NASDAQ:PLTR), which is sinking alongside much of the software industry. Either way, Palantir looks incredibly expensive, while Nvidia is arguably on the other side of the spectrum, going for multiples that are incredibly reasonable.
As to whether shares are deeply discounted remains to be seen, but I do think Burry is going to have a harder time holding onto his Nvidia put options, especially as the huge earnings continue flowing in while AI innovators prepare for Vera Rubin to drive the next inning of the AI ballgame.
Andrew Left sees Amazon as a serious rival in AI chips. He’s not wrong
As for the Nvidia risks to consider, famed short-seller Andrew Left highlighted one competitive threat that I think all Nvidia shareholders should evaluate carefully. Most notably, Left thinks fellow Mag Seven firm Amazon (NASDAQ:AMZN) could challenge the GPU king’s dominant position at the throne. Of course, Amazon’s chip ambitions are really nothing new.
Trainium and Inferentia are very impressive innovations, but until now, they’re not at Nvidia’s level quite yet. But that doesn’t mean future iterations of each chip can’t eventually start nibbling away at Nvidia’s lead. Perhaps it’s Nvidia’s huge market share in AI chips that should cause investors to question what could happen when competitive forces really start to floor it on AI chips.
Amazon’s chips certainly punch above their weight class
While Amazon isn’t the only titan to go big on AI chips, it certainly does stand out as one of the scariest rivals, especially since Left sees the firm changing the economics of the AWS platform. He’s right. If AWS can swap out Nvidia GPUs with its own, Amazon has a major opportunity to chip away at the Nvidia tax, perhaps faster than any other AI-heavy spender.
In terms of raw firepower, Amazon has a long way to go to catch Nvidia. But in terms of efficiency in the inference age (where value for money may matter more), I have to agree that Amazon might have something special up its sleeves.
While time will tell if Amazon is “the most serious threat to Nvidia’s semiconductor dominance,” I certainly would keep tabs on the latest AI chips and how they’re stacking up against Nvidia’s best. Could it be that Amazon’s CapEx will be dwarfed by the kinds of returns it’ll enjoy on chips? We’ll have to wait and see. Either way, it’s hard to compete with Amazon, and it’ll be interesting to see how Nvidia can defend its dominant position.
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