Nvidia Faces Competition from Cerebras and Huawei in AI Hardware

Nvidia Corp has seen its stock soar by over 171% in the past 12 months, driven by its dominant position in accelerated computing and artificial intelligence (AI). However, analysts are beginning to voice concerns over potential risks that could dampen its continued growth. According to Gil Luria of DA Davidson, Nvidia’s reliance on four key customers—potentially including tech giants like Microsoft, Meta Platforms, Amazon, and Google’s parent Alphabet—could expose the company to challenges if these companies continue developing in-house AI chips.

Additionally, analysts have raised concerns over whether the AI investment boom is being overhyped. This uncertainty has been further amplified by Nvidia’s recent delays in launching its Blackwell GPUs, which are expected to play a pivotal role in its product lineup.

The Growing AI Landscape and Nvidia’s Competitors

The expanding AI market has attracted numerous companies eager to capitalize on its growth, catering to industries ranging from gaming and professional visualization to data centers and the automotive sector.

On Monday, Cerebras Systems Inc. filed for an initial public offering (IPO) with the SEC, directly positioning itself as a competitor to Nvidia. Cerebras’ flagship product, the CS-3 system, is designed to handle complex AI computing workloads and power AI supercomputers. By entering the public market, Cerebras aims to compete more aggressively with Nvidia in the AI hardware space.

Cerebras Financial Performance and IPO Details

Cerebras has shown strong growth, reporting $136.4 million in revenue during the first half of 2024, a significant increase from $8.7 million in the same period the previous year. Despite this growth, the company posted a net loss of $66.6 million, which is an improvement from its $77.8 million loss a year earlier.

A substantial portion of Cerebras’ revenue—87%—came from Group 42 Holding during the first half of 2024. According to reports from Bloomberg, Cerebras is eyeing an IPO that could raise up to $1 billion, potentially valuing the company at $7 billion to $8 billion.

Huawei’s AI Chip Push and Growing Competition in China

Meanwhile, in China, Huawei Technologies is making strides in the AI chip market by offering Ascend 910C processor samples to Chinese hyperscalers, many of whom are also Nvidia customers. This move comes as China encourages its companies to adopt domestic AI chip technologies in response to the U.S. sanctions on advanced semiconductor tech.

Chinese firms like Cambricon Technologies Corp and Huawei are working to fill the gap left by these sanctions, aiming to reduce the country’s reliance on foreign AI chips, including those from Nvidia.

Looking Ahead: Navigating a Competitive AI Market

As Nvidia continues to lead the AI hardware space, it now faces increasing competition from emerging players like Cerebras and Huawei. With new entrants filing for IPOs and expanding their AI chip capabilities, Nvidia must navigate both internal challenges and external competition to maintain its dominance in the AI race.