Will Nvidia Continue to Dominate in AI? This One Number Offers a Strikingly Clear Answer.

Nvidia (NASDAQ: NVDA) has built an artificial intelligence (AI) empire, offering graphics processing units (GPUs) that power essential tasks like the training of AI models and providing a wide range of related products and services. All of this has sent earnings soaring in recent years -- and the stock price has followed.

Customers flock to Nvidia for these top AI products, and the company has consistently remained No. 1 in the AI chip market. In recent times, Nvidia says it also aims to lead in central processing units (CPUs), a market that's been dominated by Intel and Advanced Micro Devices. This represents a $200 billion opportunity, and Nvidia has said it's on track to accomplish this goal thanks to its first stand-alone CPU, launching later this year.

All of this sounds fantastic, but it's important to remember that Nvidia faces increasing competition from a variety of companies. Will this leader continue to dominate in AI? One number offers a strikingly clear answer.

Image source: Getty Images.

A history of GPU expertise

First, let's start with a quick summary of the Nvidia story so far. The company has a long history of GPU expertise, with this chip first serving the gaming market. Nvidia still makes GPUs for gaming, but it has progressively expanded the uses of these high-powered chips over the years. Through the CUDA parallel computing platform, GPUs may be programmed for other needs, and the area of AI has proven to be particularly valuable.

Today, sales of GPUs to data center customers generate the lion's share of Nvidia's revenue. And this doesn't include chips only, but related products such as networking tools, so that Nvidia offers complete AI systems. The company has also designed offerings specifically suited to various industries -- for example, AI platforms that assist healthcare companies with drug discovery.

All of this has helped Nvidia's revenue climb in the double and triple digits in recent years, and it reached a new record of more than $215 billion in the latest fiscal year. In the first quarter of this year, earnings continued to climb, with revenue rising 85% to $81 billion, and net income advancing more than 200% to $58 billion.

So it's not surprising that Nvidia's stock price has also skyrocketed, climbing 900% over five years.

Nvidia faces competition

These points all offer us reason for optimism about the future, but we shouldn't ignore the fact that Nvidia faces growing competition. Fellow chip designers, such as AMD, or new-to-the-market players like Cerebras Systems, aim to take market share. And even some of Nvidia's customers might represent a threat as they're designing their own chips. Amazon is a good example. The company has seen such demand for its own chips that it may even consider creating a separate chip business.

Now, let's consider our question: Will Nvidia continue to dominate in AI as the competition mounts and customers are served with more and more options?

One particular number offers a strikingly clear answer. Almost nine of every 10 systems new to the world's fastest supercomputer list are built on Nvidia, according to the latest rankings. This clearly shows that customers continue to turn to Nvidia -- so even though there is plenty of business for rivals to succeed too, so far this hasn't come even close to threatening Nvidia's leadership position.

The data revealed that Nvidia powers 81% -- or more than 400 -- of the world's top 500 fastest supercomputers. This is an increase of 17 systems from the last report, according to Nvidia. The list is updated twice a year.

Moving forward, Nvidia's new presence in CPUs may help it gain even more ground, as it now offers another key element, particularly in the phase of agentic AI. CPUs are the main chips that help guide AI agents as they take action to handle a problem on behalf of humans.

All of this means that, though Nvidia faces competition, customers still see the value of choosing this leader -- and the company's focus on innovation should keep this going. And that's excellent news for investors who've chosen to buy and hold Nvidia for the long term.

Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Advanced Micro Devices, Amazon, Intel, and Nvidia. The Motley Fool has a disclosure policy.