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Google: The Only Real AI Threat To Nvidia

Jun. 02, 2023 6:39 AM ETAlphabet Inc. (GOOG), GOOGLNVDA27 Comments


  • Nvidia holds a monopoly like grip on the GPU market.
  • This is costing companies like Google a lot of money, which is why they are taking action.
  • Google is already developing and using technology that will compete with NVDA's chips.
  • I believe Google has what it takes (motivation and resources) to challenge Nvidia to the throne.
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Thesis Summary

NVIDIA Corporation (NVDA) has, quite justifiably, gained a significant amount of interest following its latest earnings report. NVDA is at the head of the AI revolution, thanks to its best-in-class GPUs and accompanying software. There is not much

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This article was written by

James Foord profile picture

James Foord is an economist by trade and has been analyzing global markets for the past decade. He leads the investing group The Pragmatic Investor where the focus is on building robust and truly diversified portfolios that will continually preserve and increase wealth.

The Pragmatic Investor covers global macro, international equities, commodities, tech and cryptocurrencies and is designed to guide investors of all levels in their journey. Features include a The Pragmatic Investor Portfolio, weekly market update newsletter, actionable trades, technical analysis, and a chat room. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOGL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (27)

Also, Google may easily leverage and engage Intel's foundery services to compete with nVidia.
A visionary article! The Intel Data Center GPU Max Series outperforms Nvidia H100 PCIe card by an average of 30% on diverse workloads. And Intel Arc dGPU A750 directly competes with nVidia RTX 3050, and costing much less. We can see Google using Intel's new dGPU soon.
davel profile picture
2 years ago Google introduced their own processor to drive the Pixel that was manufactured and designed by Samsung. By the metrics I saw it was better in a few cases and worse in others than the Samsung chip it is derived from.

While I understand that AI drives Google and they have an interest in making their AI the best it can be what evidence has the company offered that it possesses world class processor design ability or that it is even in their interest to compete in this area rather than focus on software and services that they are actually good at?
Paul T. Lambert profile picture
Article seems a bit short-sighted, given that massive algorithmic inefficiency is the main reason for the (likely temporary) spike in demand for super-powerful GPUs. The problem is being tackled by hordes of AI researchers as we speak, with recent NLP models requiring a fraction of the compute to achieve comparable or superior performance. This trend is likely only to accelerate, resulting in potentially huge piles of NVDA's picks and shovels lying unused (well, unless crypto makes a massive resurgence or some as-yet unknown use cases arise).
Jennifer Warren profile picture
You raise many of the right points. Good analysis. The resources for this is a lot.
Samsara Growth profile picture
Long both Google and NVDA
Nvidia will fall 30-50% within a year. I’m curious to see if their guidance is actually sustainable. If it is then I’ll be wrong, but I doubt it is.
GetRealHere profile picture
Eh, just buy a tech ETF and regardless of who dominates who, you cant lose. Then you dont need to care...unless you work for either company or are a board member.
@GetRealHere i got a few shares of qqq at the dip a few months back and boy am i happy now! hard to distinguish wish player will dominate that’s why you have all the players in the etf lol
aspekte profile picture
I am a long term customer of Google and I used many of their products but I surely don't invest in them.
They are such an egocentric company that it hurts looking at them as an investor.
They have been upfront on so many technologies and didn't make anything out of it - last example AI.
With Semis it looks a little bit better, but I surely will not bet on them.
Maybe AMD with Lisa Su & Xilinx or Apple - but not really a competition for Nvidia for a long time.
Real competition will come out only from China, sooner or later.
Besides for the whole AI theme I don't chase pure plays. I search for companies, who I think are best suited to integrate it and make it really useful for their customers. Companies like Samsara, monday.com, Procore, there are many.
@aspekte I am sorry but your comment makes little sense on here. Google and Microsoft will be the only two companies which which enable AI across their products rapidly due to the cash reserves and technological advances they have. I was talking to a VP of SPY500 co last week and he mentioned that getting a GPU is next to impossible right now. But Google and MSFT have built the infra for themselves.

Meanwhile, the real boost to revenue will only happen to a handful of companies, believe it or now and Google is one of them.

And BTW, we did not need Monday.com to send man to moon. And they have three other competitors in Asana, Atlassian, etc.

You are comparing apples to oranges here.
AjitMD profile picture
@aspekte I think the AI industry will be segmented. In healthcare, there will be specific applications using AI to analyze different X-Rays, CT, MRI, labs. Same for various segments. Then MSFT, Google will have AI for big data sets which need a lot of processing. Even with competition, the best companies will do well. NVDA should do well with rising sales, earnings. It is a good business… just expensive.
@AjitMD Nvidia will do well until the growth normalizes. Its like $ZM's shares during the pandemic. They peak at max demand and then fall when things normalize. Similarly, apply that logic to all the cloud cos everyone was chasing. At the end of the day, Nvidia is a hardware company. Its not a recurring SaaS biz.
If you look at the track record of making money with developments then Google isn't a competitor to ANYONE!

Besides, Google has already lost to Nvidia once and that's cloud gaming lol. I mean come on, Google has a cloud business and loses to a HW vendor on cloud gaming solution??? Like seriously??? But when I read their offering back then I knew it was dead on arrival and I wasn't surprised to see it land where it belonged and that's the Google graveyard.

Google is arrogant and if it weren't for Google search then this company would eventually disappear.

I mean, Google lost to so many Tech companies, it's just sad. They lost to Facebook, they lost to Amazon, they lost to Microsoft many times.

Oh and they're even losing to The Trade Desk with UID v2 in their Ad business. A small new competitor is distributing and defining the standard after cookies for streaming and wins against the ad juggernaut Google.

The only thing really growing at Google besides their search ad business is their graveyard of great ideas but failing commercially.
@Jlagreen GOOD! Then buy Nvidia!
@Jlagreen Impresses me that quality of comments on SA is way way below Twitter. Ignorance is to a fool what knowledge is to a sage!
kayak1 profile picture
Great article. Thank you
James Foord profile picture
@kayak1 thanks. Check out the full interview here

Great post. Comprehensive, yet easy to read.

James Foord profile picture
@nicholas__t01 thanks.
You can check out the full interview here

GuyPardon profile picture
To the extent that my humble opinion matters: I fully agree with the point made in this article. Apple decided to do their own chips because of more control and less cost. Google should do the same (or at least try).
@GuyPardon they are
@GuyPardon They have been, since 2016. Search "google TPU"
@Almost Done in Tx right… it’s curious that the author didn’t mention this. Google’s problem is not their ability to innovate, it’s that engineers aren’t very good at selling what they produce.
It’s very very hard to challenge nvidia in the GPU AI chips field…
@Cdoctator Google's TPUs are far more efficient than Nvidia's A100. And 3-4x cheaper. They do not want to sell them as it is proprietary.
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