Will the thriving NVIDIA become the next Amazon AWS in its heyday?

According to the Zhitong Finance and Economics APP, in the eyes of Ron Miller and Alex Wilhelm, columnists for the US technology blog TechCrunch, NVIDIA and Amazon's cloud service department Amazon have astonishing similarities.

Firstly, their core businesses were born out of a fortunate accident. For Amazon, it realized it could sell internal services including storage and computing externally. For NVIDIA, GPUs designed for gaming are also very suitable for handling AI workloads.

This has ultimately brought explosive revenue growth to NVIDIA in recent quarters. NVIDIA's revenue has been growing at a triple-digit rate, increasing from $7.1 billion in the first quarter of the 2024 fiscal year to $22.1 billion in the fourth quarter of the 2024 fiscal year. This is a quite remarkable development trajectory, although the majority of this growth comes from the company's data center business.

While Amazon has never experienced such rapid growth, it has always been a major source of revenue for this e-commerce giant. Over the years, Amazon has grown into a profitable business, with its current market value close to $100 billion, and even if separated from Amazon, it would still be a very successful company. However, with Microsoft and Alphabet-C joining the competition, the cloud computing market has formed a "tri-polar" pattern.

NVIDIA may also face a similar issue, where other chip manufacturers will eventually start gaining meaningful market share. If competition in the GPU market intensifies, NVIDIA does have other businesses, but the revenue scale of these businesses is much smaller and their growth rate is much slower than the GPU data center business.

Short-term Financial Outlook

NVIDIA expects revenue for this quarter (the first quarter of the 2025 fiscal year) to reach $24 billion, a year-on-year increase of 234%.

This is not a figure we often see in mature public companies. Given the significant revenue growth in the past few quarters, it is expected that the growth rate will decline. Data shows that in the 2024 fiscal year, NVIDIA's fourth-quarter revenue increased by 22% compared to the previous quarter, while the first-quarter revenue for the 2025 fiscal year will see a more moderate increase of 8.6%. NVIDIA is also expected to experience other growth slowdowns in the future.

For example, analysts predict that NVIDIA's revenue for this fiscal year will reach $110.5 billion, an 81% increase from the same period last year. This is far below the company's 126% growth rate in the 2024 fiscal year However, at least in the next few quarters, NVIDIA's annual revenue is expected to continue to exceed the $100 billion mark, which is impressive for a company that had a total revenue of only $7.19 billion in the same period last year.

In short, although the eye-popping revenue growth data this year will slow down, NVIDIA still has huge room for growth in the future.

Unstoppable NVIDIA?

In the coming years, even as competition intensifies from AMD, Intel, and other chip manufacturers, NVIDIA will remain the biggest winner in the artificial intelligence boom. Like Amazon, NVIDIA will eventually face fiercer competition, but the company currently holds such a large market share that it can afford to give up some market share.

Looking only at GPU chips (excluding motherboards or other related products), IDC data shows that NVIDIA firmly controls this market: with a market share as high as 97.7%.

However, data from Jon Peddie Research, a company tracking the GPU market, shows that while NVIDIA still dominates, AMD's market share is steadily increasing, rising from 12% in the fourth quarter of 2022 to 19% in the fourth quarter of 2023.

Analyst C. Robert Dow of Jon Peddie Research stated that some of these fluctuations are related to the timing of new product launches. Dow said: "Due to market cycles (timing of new graphics card releases) and changes in inventory levels, AMD's market share may increase slightly, but NVIDIA has been dominant for many years, and this situation will continue."

IDC analyst Shane Rau, who tracks the chip market, also expects that despite changing trends, NVIDIA's dominance will continue. "There are trends and counter-trends, NVIDIA participates in a very large market, which is constantly expanding, and growth will continue, at least for the next five years."

Part of the reason is that NVIDIA sells more than just chips. He said: "They will sell you motherboards, systems, software, services, and time on a supercomputer. These markets are all huge and growing, and NVIDIA is closely related to all of these markets."

However, not everyone believes that NVIDIA's growth is unstoppable. Cloud computing veteran consultant and writer David Linthicum pointed out that customers do not always need GPUs, and companies are starting to realize this. He said, 'They say they need GPUs. I took a look, did some rough math, and they don't need them. CPUs are perfectly fine.'

As this situation unfolds, he believes that NVIDIA will start to slow down and its market dominance will weaken. Linthicum stated, 'I think over the next few years, we will see NVIDIA become a weaker player. We will see this because there are too many alternatives being produced.'

Rau mentioned that as enterprises expand their use of NVIDIA products for AI use cases, other vendors will also benefit. 'I think you will see a growing market that will create favorable conditions for NVIDIA in the future. But there will also be other companies following closely, especially benefiting from artificial intelligence.'

It is also possible that some disruptive forces will come into play, which would be a positive outcome to prevent one company from becoming too dominant. 'You almost want disruption to happen because that's the best way the market and capitalism work, right? Someone gets ahead, other vendors follow closely, and the market keeps growing. Some old companies will eventually be disrupted,' Rau stated.

In fact, we are already seeing this happening at Amazon, with Microsoft making progress through its collaboration with OpenAI, while Amazon is forced to catch up in the field of artificial intelligence. NVIDIA currently firmly holds the dominant position and is making a lot of money. Miller and Wilhelm warned that this does not mean NVIDIA will have smooth sailing, as the company may face greater competitive pressure in the future