Nvidia`s Meteoric Rise: Can the AI Chip Giant Sustain its Growth Momentum?

Case Code: BSTR687 Case Length: 14 Pages Period: 2023-2024 Pub Date: 2025 Teaching Note: Available

Price: Rs.400 Organization : Nvidia Corporation Industry : Technology & Communications Countries : United States Themes: Competitive Strategy, Growth Strategy Artificial Intelligence,Regulatory Environment

Abstract Case Intro 1 Case Intro 2 Excerpts

Excerpts

Initial Hiccups

The mid-1990s witnessed domination by several players in the graphics card market. The players had substantial resources as well as market share. On the other hand, Nvidia was a startup which had to carve out a niche for itself amidst the dominant players..

The Success

Nvidia’s initial success was attributed to the strategic decisions it made during its formative years. The company developed its own technologies instead of buying them from third parties. This allowed it to have better quality control of its products. While this approach required huge investments in research and development, it paid off as it led Nvidia to set industry standards instead of following them..

Global AI Chip Market

The global AI chip market was showing tremendous potential that could be tapped by several AI chip makers as it was poised to grow from US$123.16 billion in 2024 to US$311.58 billion by 2029, according to market research and competitive intelligence company MarketsandMarkets. The global AI chip market was growing due to the increasing use of generative AI and adoption of AI servers by several industries from banking to financial services to retail, e-commerce, healthcare, media and entertainment, etc..

Competition

In 2023, Nvidia started posing increasing competition to players in AI networking. However, American computer networking company Arista Networks Inc. (Arista) was becoming a formidable player due to increasing demand from players such as Meta and Microsoft. For the second quarter of 2023, Arista recorded 39% YoY growth. According to Arista CEO Jayshree Ullal, “The AI opportunity is exciting. As our largest cloud customers review their classic cloud and AI networking plans, Arista is adapting to these changes, thereby doubling down on our investments in AI.”..

Looking Ahead

Despite holding a market leadership position in the AI chip market, Nvidia was facing increasing competition from several of its clients such as Meta, Google, Amazon, and Microsoft who were launching their own chips. According to Luria, “The biggest challenge for Nvidia is that their customers want to compete with them.” Some analysts believed that the delay in the supply of Blackwell chips could enable its competitors to catch up in the lucrative AI chip market..

Exhibits

Exhibit I: Nvidia’s Business Segments
Exhibit II: Nvidia’s Acquisitions
Exhibit III: Nvidia Corporation and Subsidiaries
Exhibit IV: Nvidia’s Revenues by Business Segments
Exhibit V: AMD’s Net Revenues by Business Segments
Exhibit VI: Intel’s Net Revenues by Business Segments
Exhibit VII: Data Center Segment Revenues of Major Players

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