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Nvidia was the first $5 trillion stock but has fallen in the past few weeks.
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The chipmaker has an advantage in its vertically integrated product ecosystem.
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However, it faces new competition from the likes of Amazon and Alphabet.
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10 stocks we like better than Nvidia ›
NVIDIA (NASDAQ: NVDA) At the end of October, the market capitalization of the stock market reached US$5 trillion, once again creating stock market history. However, it has since fallen nearly 10% from its highs and is currently worth $4.4 trillion. What’s next for the artificial intelligence (AI) giant?
One of the ways Nvidia stays atop the AI mountaintop is by continually upping its game and releasing new groundbreaking products. It is best known for its expensive and powerful graphics processing units (GPUs), but it is increasingly focusing on vertically integrated products to attract high-paying customers into its ecosystem.
These companies spend a lot of money on AI development using Nvidia products, creating a high barrier to entry for other vendors. This gives Nvidia an advantage based on having the most powerful programs.
However, there are other top companies including Amazon and letteris creating its own AI chips and looking for white spaces to drive AI.
NVIDIA is likely to continue to introduce new and improved technologies and maintain its leadership position, but as competition intensifies, the situation continues to change, and the company scales, the growth rate will slow down. Prices have fallen to more realistic valuations that could still beat the market next year, but are unlikely to deliver the life-changing gains of the past.
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