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Startups taking on Nvidia face an uphill battle, but the dominant AI chipmaker faces another real threat

Dan DeFrancesco   

Startups taking on Nvidia face an uphill battle, but the dominant  AI chipmaker faces another real threat
  • This post originally appeared in the Insider Today newsletter.

Happy Friday! Yes, there are awards for funny photos of people's pets. And yes, they are hilarious.

In today's big story, we're looking at the startups attempting to do the impossible: take on Nvidia.

What's on deck:

But first, you come at the king, you best not miss.


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The big story

The impossible fight

The house always wins in Las Vegas. But in Silicon Valley, it's Nvidia holding all the chips. Literally.

Nvidia's dominant position as the AI chipmaker is undeniable, but that hasn't stopped some optimistic entrepreneurs from taking a shot at the crown. Business Insider's Alistair Barr has a rundown of the AI chip startups looking to challenge Nvidia.

For many experts in the space, it's a fool's errand. Put more bluntly, a VC told Alistair that betting against Nvidia is "a very stupid investment." OK, but tell me how you really feel.

The pessimism for newcomers in the space isn't unwarranted, as they face plenty of headwinds.

The AI chipmaking process requires lots of money — some startups have raised well north of $100 million — and time. That's a tough equation when the competition you're chasing is growing market share and making money hand-over-fist while its CEO is treated like a rock star.

So why even bother?

A tiny fraction of a $3 trillion business — roughly Nvidia's market cap — is still a lot of money. So even if a startup can't go head-to-head with Nvidia, carving out a small portion of its market share isn't too shabby.

The biggest threat to Nvidia isn't startups, though.

When your stock looks like a vertical line, it gets people's attention. For Nvidia, that reportedly means regulators are taking a closer look.

The Justice Department is preparing to investigate Nvidia's dominance and whether it violates antitrust laws, according to a recent report from The New York Times. That could enable upstarts to gain some ground.

As much as Silicon Valley loves to denounce regulation, it has, in a roundabout way, led to some innovation. Take the DOJ's antitrust case against Microsoft in the late '90s, a turning point for tech companies like Google and Apple.

You'll be hard-pressed to find tech companies cheering on regulators, but they probably wouldn't mind Nvidia facing some competition. Some have already teamed up to break Nvidia's stranglehold on the market.

Even if these AI chip startups eventually fail, they could still do the industry good. A little competition can keep those in front from getting too stagnant…or greedy.


3 things in markets

  1. They've got the research to back it up. BI identified 16 analysts ages 35 and under as part of its annual rising stars of equity research list. The group is known for providing reliable info and context to investors looking to suss out winners and losers in the market.
  2. Roaring Kitty is coming to you live. The king of meme stocks is scheduled to livestream on his YouTube channel at noon ET today. The announcement sent GameStop's stock soaring more than 40%.
  3. The real reason for copper's sky-high rally. It's not just supply and demand — the metal's massive bull run is likely due to expectations of interest-rate cuts, according to trading firm Trafigura. Prices swung to an all-time high last month, but the firm says copper's low inventory isn't new.

3 things in tech

  1. A new "dark age" could be on the horizon. One legal expert told BI artificial intelligence could usher in a period of societal decline if the industry isn't regulated. Don't believe them? Look how the largely unregulated social media turned out.
  2. Leaked org chart shows who's running Microsoft's new AI organization. We got a look at who's behind Mustafa Suleyman's new AI group. One interesting hire: Suleyman's ghostwriter.
  3. Tesla shareholders criticize Musk's latest move. Musk recently admitted that he delayed a shipment of Nvidia chips for Tesla. Now, shareholders are telling BI that decision is further proof he doesn't deserve his roughly $46 billion pay package, up for a vote on June 13.

3 things in business

  1. Six of Satya Nadella's best tips for running a company. This year marks a decade with Nadella at Microsoft's helm. He has said listening in meetings, being decisive, and having empathy can help build a successful company.
  2. Lifestyle creep can cause HIFIs to spend "every cent they make." HIFIs — high-income, financially insecure people — tend to spend more than they earn, a financial planner says. She shared small spending changes that can boost HIFIs' future wealth.
  3. Why teachers are excited about AI. Big Tech is looking to get into education, and while some are worried, many educators are actually optimistic. One major reason: it can help them maximize their time.

In other news


What's happening today

  • The monthly employment report comes out today.
  • Nvidia distribution date for its 10-for-1 stock split.
  • Saudi Aramco is expected to announce the final pricing of its secondary public offering.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Jack Sommers, deputy editor, in London. George Glover, reporter, in London. Annie Smith, associate producer, in London.



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