R "Ray" Wang
R "Ray" Wang
News Analysis: Only A Few Companies Will Win In Fueling The Age of AI
AI Begins And Ends With Nvidia
Despite the massive buzz on AI, only a few core companies that power the Age of AI will succeed. The high capital costs of research and development investment, the time required to take a product to market, and the ability to cross competitive moats create a massive barrier to entry. In fact, only a few vendors have shown significant profits in AI:
- Nvidia
- Adobe
- TSMC
- Oracle
- HPE
- C3
- Palantir
Given the level of investment by Meta, Microsoft and Google, expect these vendors to show significant revenues in the next three to four quarters.
Nvidia's Success Is Built On Seven Moats
Nvidia is the foundational stock in the Age of AI. CEO Jensen Huang intends to achieve vertically integrated domination from silicon to software through partnerships and direct routes to market. Unlike the PC age where Microsoft, Intel, and Cisco served as a triumvirate foundational players, this new era will have new players all tied back to Nvidia.
Constellation believes that Nvidia has seven moats that will drive the company's success:
- Visionary founder-led CEO
- High barrier to entry in the chip market
- High switching costs, especially the CUDA software layer
- Dominant market share
- Strong product roadmap and research bench
- GPU is the default standard for AI inference and training
- Growth numbers don't lie with gross margins of 78%
Your POV
Who do you think are the winners in the Age of AI? Do you think Nvidia will maintain its dominance in the market?
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