Nvidia has established itself as the most valuable and dominant chip developer in the field of artificial intelligence (AI) and is taking strategic steps to further secure this leadership position and explore new markets. This poses a significant challenge for competitors like Microsoft, which is also active in the AI sector.
Nvidia’s Dominance in the AI Market
- Market Leadership: Nvidia currently holds about 92% of the AI data center GPU market. Its architectures H100 and Blackwell are considered the industry standard for training large language models and supercomputing systems. The Blackwell architecture is described as “the fastest introduction in the company’s history” and already accounts for about 70% of its data center computing revenue.
- Financial Strength: In fiscal year 2025, Nvidia’s revenue increased by an impressive +114.2%, driven by strong demand for AI products and strategic product launches like Blackwell. In the first quarter of 2026, Nvidia achieved a revenue of $44 billion, a 69% increase over the previous year; the data center segment alone grew by 73%.
- Strategic Adaptation to Geopolitical Challenges: Despite new US export restrictions against the sale of certain GPUs (H20) to China—a market with a volume of about $50 billion—Nvidia is seeking compliant product options for China. Losing this market could open opportunities for competitors, yet to date, Nvidia’s position remains strong.
New Markets & Strategies to Secure Dominance
- Sovereign AI Initiatives: Nvidia is strategically investing in so-called “sovereign AI” projects, where countries want to build their own AI infrastructure. This strategy aims to help unlock new growth opportunities and reduce dependency on single markets.
- Partnerships & Global Expansion: Collaborations with partners like Saudi Arabia (HUMAIN) or EU-wide projects with enormous computing power reaffirm Nvidia’s global leadership in high-end AI hardware.
Impact on Microsoft
Microsoft is indeed a significant player in the AI space, particularly through its cloud platform Azure and partnerships with OpenAI, yet Nvidia dominates the underlying hardware base for many of these applications. Nvidia’s strong market position means:
- Microsoft must continue to collaborate closely with Nvidia or develop alternative hardware solutions.
- If Nvidia’s dominance continues to solidify or expand, it could impact Microsoft’s bargaining position on hardware prices.
- On the other hand, Nvidia’s innovative strength also offers opportunities for Microsoft’s cloud AI offerings through more powerful infrastructure.
Relevance for Investors
For investors, Nvidia’s positioning is highly relevant:
- The company shows robust growth potential despite regulatory risks.
- The high valuation reflects expectations of long-term growth; analysts see price targets of around $220 per share by year-end (approximately +40% upside).
- Risks mainly stem from geopolitical restrictions and increasing competition (e.g., AMD or Huawei), yet Nvidia’s market leadership currently remains unchallenged.
Conclusion: While Microsoft continues to play an important role in software solutions in the AI sector, it must indeed “tremble” in light of Nvidia’s technological supremacy, particularly in chip development.