Nvidia faces scrutiny as rivals emerge in the artificial intelligence chip industry

Jensen Huang, founder and chief executive of Nvidia, forged a deep connection with Sam Altman of OpenAI nearly a decade ago, personally delivering Nvidia’s first supercomputer to the AI pioneer. This longstanding relationship recently culminated in a significant development when Nvidia committed a $100bn investment in OpenAI, cementing their collaboration at the heart of the artificial intelligence boom.

This partnership came under the spotlight amid speculation that OpenAI might opt to use rival chips from Google. Although OpenAI clarified it would not pursue Google’s chips, the move intensified pressure on Nvidia to safeguard its grip on the AI sector. Market observers now question whether this investment will secure Nvidia’s dominance, as new competitors threaten its market share.

Nvidia has transformed its reputation from a graphics chip manufacturer to the cornerstone of the AI revolution. Following the launch of ChatGPT in 2022, Nvidia’s valuation increased more than tenfold, with Huang now among the world’s ten wealthiest individuals. Nvidia’s GPUs are ubiquitous in AI data centres; demand for its products has surged as the technology powering advanced AI applications proliferates globally. Despite these achievements, heightened competition and market scepticism have begun to temper optimism for Nvidia’s future growth trajectory.

Recent weeks have seen Nvidia weather accusations that its rise is unsustainable. The company has invested heavily in enterprises reliant on its technology, including billions in Anthropic, Elon Musk’s Grok, and CoreWeave. Critics compare these relationships to the circular investments of the dotcom era, when interconnected financial interests ultimately exacerbated market collapses. Prominent investor Michael Burry recently disclosed a substantial short position against Nvidia, citing similarities to Cisco’s fortunes during the dotcom crash. Online commentators have also raised concerns regarding Nvidia’s accounting, alleging irregularities comparable to historical corporate scandals, though the company strongly denies such claims.

Nvidia’s leadership has responded directly to these allegations, distributing a seven-page memo to analysts disputing the accusations and defending its business practices. The company maintains that investment in partner businesses constitutes only a minor portion of its revenues and emphasises transparency in financial reporting. Nevertheless, mention of past financial scandals in reports has introduced new scrutiny, complicating investor sentiment.

The competitive landscape has shifted materially with the release of Google’s Gemini 3 AI model, which surpassed ChatGPT using Google’s own TPUs instead of Nvidia hardware. Meta, a major Nvidia client, is reportedly considering significant investment in Google chips. The emergence of rival technologies undermines the perception that Nvidia holds an effective monopoly over the supply of AI chips, prompting questions about the sustainability of its market dominance.

Industry analysts anticipate that Nvidia will remain profitable, even as its unrivalled position diminishes. Major technology firms, such as Microsoft and Amazon, are developing their own chips, reducing their dependency on Nvidia and gaining greater leverage in commercial negotiations. Internally, Huang has acknowledged the increased stakes, warning staff that even minor errors could trigger a dramatic loss of confidence in the company. The coming period will test whether Nvidia’s recent measures can preserve its standing, or if market dynamics will ultimately erode its historic lead in the AI chip sector.