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Jensen Huang, co-founder and chief executive officer of Nvidia Corp., during the Nvidia GPU Technology Conference (GTC) in San Jose, California, US, on Tuesday, March 19, 2024. 

David Paul Morris | Bloomberg | Getty Images

Nvidia’s 27% rally in May pushed its market cap to $2.7 trillion, behind only Microsoft and Apple among the most-valuable public companies in the world. The chipmaker reported a tripling in year-over-year sales for the third straight quarter driven by soaring demand for its artificial intelligence processors.

Mizuho Securities estimates that Nvidia controls between 70% and 95% of the market for AI chips used for training and deploying models like OpenAI’s GPT. Underscoring Nvidia’s pricing power is a 78% gross margin, a stunningly high number for a hardware company that has to manufacture and ship physical products.

Rival chipmakers Intel and Advanced Micro Devices reported gross margins in the latest quarter of 41% and 47%, respectively.

Nvidia’s position in the AI chip market has been described as a moat by some experts. Its flagship AI graphics processing units (GPUs), such as the H100, coupled with the company’s CUDA software led to such a head start on the competition that switching to an alternative can seem almost unthinkable.

Still, Nvidia CEO Jensen Huang, whose net worth has swelled from $3 billion to about $90 billion in the past five years, has said he’s “worried and concerned” about his 31-year-old company losing its edge. He acknowledged at a conference late last year that there are many powerful competitors on the rise.

“I don’t think people are trying to put me out of business,” Huang said in November. “I probably know they’re trying to, so that’s different.”

Nvidia has committed to releasing a new AI chip architecture every year, rather than every other year as was the case historically, and to putting out new software that could more deeply entrench its chips in AI software.

But Nvidia’s GPU isn’t alone in being able to run the complex math that underpins generative AI. If less powerful chips can do the same work, Huang might be justifiably paranoid.

The transition from training AI models to what’s called inference — or deploying the models — could also give companies an opportunity to replace Nvidia’s GPUs, especially if they’re less expensive to buy and run. Nvidia’s flagship chip costs roughly $30,000 or more, giving customers plenty of incentive to seek alternatives.

“Nvidia would love to have 100% of it, but customers would not love for Nvidia to have 100% of it,” said Sid Sheth, co-founder of aspiring rival D-Matrix. “It’s just too big of an opportunity. It would be too unhealthy if any one company took all of it.”

Founded in 2019, D-Matrix plans to release a semiconductor card for servers later this year that aims to reduce the cost and latency of running AI models. The company raised $110 million in September.

In addition to D-Matrix, companies ranging from multinational corporations to nascent startups are fighting for a slice of the AI chip market that could reach $400 billion in annual sales in the next five years, according to market analysts and AMD. Nvidia has generated about $80 billion in revenue over the past four quarters, and Bank of America estimates the company sold $34.5 billion in AI chips last year.

Many companies taking on Nvidia’s GPUs are betting that a different architecture or certain trade-offs could produce a better chip for particular tasks. Device makers are also developing technology that could end up doing a lot of the computing for AI that’s currently taking place in large GPU-based clusters in the cloud.

“Nobody can deny that today Nvidia is the hardware you want to train and run AI models,” Fernando Vidal, co-founder of 3Fourteen Research, told CNBC. “But there’s been incremental progress in leveling the playing field, from hyperscalers working on their own chips, to even little startups, designing their own silicon.”

AMD CEO Lisa Su wants investors to believe there’s plenty of room for many successful companies in the space.

“The key is that there are a lot of options there,” Su told reporters in December, when her company launched its most recent AI chip. “I think we’re going to see a situation where there’s not only one solution, there will be multiple solutions.”

Other big chipmakers

Lisa Su displays an AMD Instinct MI300 chip as she delivers a keynote address at CES 2023 in Las Vegas, Nevada, on Jan. 4, 2023.

David Becker | Getty Images

Nvidia’s top customers

How AWS is designing its own chips to help catch Microsoft and Google in generative A.I. race

One potential challenge for Nvidia is that it’s competing against some of its biggest customers. Cloud providers including Google, Microsoft and Amazon are all building processors for internal use. The Big Tech three, plus Oracle, make up over 40% of Nvidia’s revenue.

Amazon introduced its own AI-oriented chips in 2018, under the Inferentia brand name. Inferentia is now on its second version. In 2021, Amazon Web Services debuted Tranium targeted to training. Customers can’t buy the chips but they can rent systems through AWS, which markets the chips as more cost efficient than Nvidia’s.

Google is perhaps the cloud provider most committed to its own silicon. The company has been using what it calls Tensor Processing Units (TPUs) since 2015 to train and deploy AI models. In May, Google announced the sixth version of its chip, Trillium, which the company said was used to develop its models, including Gemini and Imagen.

Google also uses Nvidia chips and offers them through its cloud.

Microsoft isn’t as far along. The company said last year that it was building its own AI accelerator and processor, called Maia and Cobalt.

Meta isn’t a cloud provider, but the company needs massive amounts of computing power to run its software and website and to serve ads. While the Facebook parent company is buying billions of dollars worth of Nvidia processors, it said in April that some of its homegrown chips were already in data centers and enabled “greater efficiency” compared to GPUs.

JPMorgan analysts estimated in May that the market for building custom chips for big cloud providers could be worth as much as $30 billion, with potential growth of 20% per year.

Startups

Cerebras’ WSE-3 chip is one example of new silicon from upstarts designed to run and train artificial intelligence.

Cerebras Systems

Venture capitalists see opportunities for emerging companies to jump into the game. They invested $6 billion in AI semiconductor companies in 2023, up slightly from $5.7 billion a year earlier, according to data from PitchBook.

It’s a tough area for startups as semiconductors are expensive to design, develop and manufacture. But there are opportunities for differentiation.

For Cerebras Systems, an AI chipmaker in Silicon Valley, the focus is on basic operations and bottlenecks for AI, versus the more general purpose nature of a GPU. The company was founded in 2015 and was valued at $4 billion during its most recent fundraising, according to Bloomberg.

The Cerebras chip, WSE-2, puts GPU capabilities as well as central processing and additional memory into a single device, which is better for training large models, said CEO Andrew Feldman.

“We use a giant chip, they use a lot of little chips,” Feldman said. “They’ve got challenges of moving data around, we don’t.”

Feldman said his company, which counts Mayo Clinic, GlaxoSmithKline, and the U.S. Military as clients, is winning business for its supercomputing systems even going up against Nvidia.

“There’s ample competition and I think that’s healthy for the ecosystem,” Feldman said.

Sheth from D-Matrix said his company plans to release a card with its chiplet later this year that will allow for more computation in memory, as opposed to on a chip like a GPU. D-Matrix’s product can be slotted into an AI server along existing GPUs, but it takes work off of Nvidia chips, and helps to lower the cost of generative AI.

Customers “are very receptive and very incentivized to enable a new solution to come to market,” Sheth said.

Apple and Qualcomm

Apple iPhone 15 series devices are displayed for sale at The Grove Apple retail store on release day in Los Angeles, California, on September 22, 2023. 

Patrick T. Fallon | Afp | Getty Images

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Former Microsoft CEO Steve Ballmer says, as shareholder, tariffs are ‘not good’

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Former Microsoft CEO Steve Ballmer says, as shareholder, tariffs are 'not good'

President Trump’s new tariffs on goods that the U.S. imports from over 100 countries will have an effect on consumers, former Microsoft CEO Steve Ballmer told CNBC on Friday. Investors will feel the pain, too.

Microsoft’s stock dropped almost 6% in the past two days, as the Nasdaq wrapped up its worst week in five years.

“As a Microsoft shareholder, this kind of thing is not good,” Ballmer said, in an interview with Andrew Ross Sorkin that was tied to Microsoft’s 50th anniversary celebration. “It creates opportunity to be a serious, long-term player.”

Ballmer was sandwiched in between Microsoft co-founder Bill Gates and current CEO Satya Nadella for the interview.

“I took just enough economics in college — that tariffs are actually going to bring some turmoil,” said Ballmer, who was succeeded by Nadella in 2014. Gates, Microsoft’s first CEO, convinced Ballmer to join the company in 1980.

Gates, Ballmer and Nadella attended proceedings at Microsoft’s Redmond, Washington, campus on Friday to celebrate its first half-century.

Between the tariffs and weak quarterly revenue guidance announced in January, Microsoft’s stock is on track for its fifth straight month of declines, which would be the worst stretch since 2009. But the company remains a leader in the PC operating system and productivity software markets, and its partnership with startup OpenAI has led to gains in cloud computing.

“I think that disruption is very hard on people, and so the decision to do something for which disruption was inevitable, that needs a lot of popular support, and nobody could game theorize exactly who is going to do what in response,” Ballmer said, regarding the tariffs. “So, I think citizens really like stability a lot. And I hope people — individuals who will feel this, because people are feeling it, not just the stock market, people are going to feel it.”

Ballmer, who owns the Los Angeles Clippers, is among Microsoft’s biggest fans. He said he’s the company’s largest investor. In 2014, shortly after he bought the basketball team for $2 billion, he held over 333 million shares of the stock, according to a regulatory filing.

“I’m not going to probably have 50 more years on the planet,” he said. “But whatever minutes I have, I’m gonna be a large Microsoft shareholder.” He said there’s a bright future for computing, storage and intelligence. Microsoft launched the first Azure services while Ballmer was CEO.

Earlier this week Bloomberg reported that Microsoft, which pledged to spend $80 billion on AI-enabled data center infrastructure in the current fiscal year, has stopped discussions or pushed back the opening of facilities in the U.S. and abroad.

JPMorgan Chase’s chief economist, Bruce Kasman, said in a Thursday note that the chance of a global recession will be 60% if Trump’s tariffs kick in as described. His previous estimate was 40%.

“Fifty years from now, or 25 years from now, what is the one thing you can be guaranteed of, is the world needs more compute,” Nadella said. “So I want to keep those two thoughts and then take one step at a time, and then whatever are the geopolitical or economic shifts, we’ll adjust to it.”

Gates, who along with co-founder Paul Allen, sought to build a software company rather than sell both software and hardware, said he wasn’t sure what the economic effects of the tariffs will be. Today, most of Microsoft’s revenue comes from software. It also sells Surface PCs and Xbox consoles.

“So far, it’s just on goods, but you know, will it eventually be on services? Who knows?” said Gates, who reportedly donated around $50 million to a nonprofit that supported Democratic nominee Kamala Harris’ losing campaign.

— CNBC’s Alex Harring contributed to this report.

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AppLovin can offer TikTok ‘much stronger bid than others,’ CEO says

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AppLovin can offer TikTok 'much stronger bid than others,' CEO says

Piotr Swat | Lightrocket | Getty Images

AppLovin CEO Adam Foroughi provided more clarity on the ad-tech company’s late-stage effort to acquire TikTok, calling his offer a “much stronger bid than others” on CNBC’s The Exchange Friday afternoon.

Foroughi said the company is proposing a merger between AppLovin and the entire global business of TikTok, characterizing the deal as a “partnership” where the Chinese could participate in the upside while AppLovin would run the app.

“If you pair our algorithm with the TikTok audience, the expansion on that platform for dollars spent will be through the roof,” Foroughi said.

The news comes as President Trump announced he would extend the deadline a second time for TikTok’s Chinese-owned parent company ByteDance to sell the U.S. subsidiary of TikTok to an American buyer or face an effective ban on U.S. app stores. The new deadline is now in June, which, as Foroughi described, “buys more time to put the pieces together” on AppLovin’s bid. 

“The president’s a great dealmaker — we’re proposing, essentially an enhancement to the deal that they’ve been working on, but a bigger version of all the deals contemplated,” he added.

AppLovin faces a crowded field of other interested U.S. backers, including Amazon, Oracle, billionaire Frank McCourt and his Project Liberty consortium, and numerous private equity firms. Some proposals reportedly structure the deal to give a U.S. buyer 50% ownership of the company, rather than a complete acquisition. The Chinese government will still need to approve the deal, and AppLovin’s interest in purchasing TikTok in “all markets outside of China” is “preliminary,” according to an April 3 SEC filing.

Correction: A prior version of this story incorrectly characterized China’s ongoing role in TikTok should AppLovin acquire the app.

WATCH: AppLovin CEO Adam Foroughi on its bid to buy TikTok

AppLovin CEO Adam Foroughi on its bid to buy TikTok

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Trump’s tariff rates for other countries radically larger than World Trade data

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Trump's tariff rates for other countries radically larger than World Trade data

U.S. President Donald Trump speaks during an event announcing new tariffs in the Rose Garden at the White House in Washington, April 2, 2025.

Chip Somodevilla | Getty Images

President Donald Trump announced an aggressive, far-reaching “reciprocal tariff” policy this week, leaving many economists and U.S. trade partners to question how the White House calculated its rates.

Trump’s plan established a 10% baseline tariff on almost every country, though many nations such as China, Vietnam and Taiwan are subject to much steeper rates. At a ceremony in the Rose Garden on Wednesday, Trump held up a poster board that outlined the tariffs that it claims are “charged” to the U.S., as well as the “discounted” reciprocal tariffs that America would implement in response.

Those reciprocal tariffs are mostly about half of what the Trump administration said each country has charged the U.S. The poster suggests China charges a tariff of 67%, for instance, and that the U.S. will implement a 34% reciprocal tariff in response.

However, a report from the Cato Institute suggests the trade-weighted average tariff rates in most countries are much different than the figures touted by the Trump administration. The report is based on trade-weighted average duty rates from the World Trade Organization in 2023, the most recent year available.

The Cato Institute says the 2023 trade-weighted average tariff rate from China was 3%. Similarly, the administration says the EU charges the U.S. a tariff of 39%, while the 2023 trade-weighted average tariff rate was 2.7%, according to the report.

In India, the Trump administration claims that a 52% tariff is charged against the U.S., but Cato found that the 2023 trade-weighted average tariff rate was 12%.

Many users on social media this week were quick to notice that the U.S. appeared to have divided the trade deficit by imports from a given country to arrive at tariff rates for individual countries. It’s an unusual approach, as it suggests that the U.S. factored in the trade deficit in goods but ignored trade in services.

The Office of the U.S. Trade Representative briefly explained its approach in a release, and stated that computing the combined effects of tariff, regulatory, tax and other policies in various countries “can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero.”

If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair,” the USTR said in the release.

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