Who Is Nvidia's Biggest Rival? Jensen Huang Offered a Clue, and You May be Surprised by the Answer.

Nvidia (NVDA -0.75%) has built a dominant position in one of the highest-growth areas around: artificial intelligence (AI) chips. That has helped it generate enormous levels of revenue, for example, $130 billion last year; register quadruple-digit gains in stock price over the past five years; and become one of the most-watched tech companies.

But one thing has worried Nvidia investors and potential investors in recent quarters, and that's the possibility of rivals taking share from this market leader. After all, Nvidia's chips sell for premium prices, and as need for chips increase, some customers may look more closely at costs. Rival Advanced Micro Devices sells chips that may be less powerful than Nvidia's but still offer top quality -- and at a lower price. And Nvidia's customers could be considered competitors as some of them -- such as Amazon and Meta Platforms -- have developed their own lower-cost chips.

So now you may be wondering which of these is Nvidia's biggest rival, or the one that could weigh on its revenue growth. A comment by Nvidia CEO Jensen Huang offers us a clue. And you may be surprised by the answer.

The subject of innovation

Before diving in, it's important to consider the subject of innovation, something very near and dear to Nvidia. The tech giant always has been an innovator, launching new chip architectures every other year. Nvidia rolled out Hopper in 2022, and prior to that released Ampere in 2020. It's recently picked up the pace, though, releasing the Blackwell architecture late last year and now preparing for releases of Blackwell Ultra later this year, followed by the Vera Rubin architecture in the second half of 2026, then Rubin Ultra a year later.

This is positive as it shows Nvidia is ahead of the curve with its technology, a ticket to staying ahead of rivals. But one rival in particular could be a strong one. A comment by Huang during the company's annual GTC AI conference this week offers a clue about the dynamic between Nvidia and this rival.

"There are circumstances where Hopper is fine," Huang said when comparing Nvidia's previous architecture to the latest release, Blackwell. Then, Huang immediately went on to say Blackwell's performance far outshines that of the older architecture and is the one for most customers to get in on now. Blackwell offers 40 times the performance of Hopper in reasoning, or the process of "thinking" to solve complex problems.

"Chief revenue destroyer"

Huang also referred to himself as the company's "chief revenue destroyer" as he essentially advised customers to forget Hopper, just recently Nvidia's principal AI architecture, and flock to the brand-new Blackwell.

All of this suggests Nvidia's biggest competitor actually is the company itself as it introduces new systems that crush the performance of older ones. It's clear that today, with Blackwell demand surpassing supply, Nvidia is successfully transitioning customers to this new architecture. Blackwell brought in $11 billion in revenue in its first quarter on the market. But the big challenge moving forward will be to continue shepherding customers to the next chip or platform on an annual basis. After all, as Huang even noted, Hopper continues to be appropriate for some situations.

Customers really will need to see the reason for the transition from Blackwell to Blackwell Ultra and then later to the Rubin architecture and so on. The risk is some could continue along with the current platform for an extra year, and upgrade on a less frequent basis.

Could Nvidia hurt its own sales?

So, could Nvidia's aggressive pace of innovation actually hurt its sales growth? In theory, it's possible. If customers choose to stick with Nvidia's older innovations, this could hamper sales of newer products.

But I don't think this will happen. It's important to keep in mind that Nvidia's biggest customers include the world's tech giants, and they have lots of resources to invest in AI. (Meta Platforms, for instance, recently said it would spend as much as $65 billion this year to support AI growth.) They also have the desire to score an AI win and could have the best chance of doing so if they use the best tools available. All of this should support the idea of Nvidia's big customers advancing from one system to the next as the company launches these innovations.

But what about Nvidia's other competitors, from customers developing their own chips to fellow chip designer AMD? And here, too, I think Nvidia doesn't have a lot to worry about. In this high-growth AI market, there's room for those players to generate revenue growth without disturbing Nvidia's dominance, and that makes Nvidia a great stock to own as the AI boom continues.