This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
Technology companies of all shapes and sizes have bet their futures on artificial intelligence (AI). The shockwave felt by nearly everyone after the release of OpenAI's ChatGPT was the catalyst for the current AI land grab, and subsequent releases of its model, as well as other advanced models released by competitors, are fueling an all-out king-of-the-hill battle among tech giants.
Among the top contenders is semiconductor company Nvidia (NASDAQ: NVDA). Once an obscure name among more well-known tech companies, Nvidia has bolted to the top of many investors' buy lists and jockeys for the most valuable company title with Apple.
There's a risk of choosing Nvidia as a top AI stock for the next decade simply because it's been a big winner over the past few years. But there's also a risk in ignoring the company's clear advantages in the AI market and settling for lesser AI stocks.
Here's why I think Nvidia may go the distance over the next 10 years.
All the components to make a long-term AI leader
Nvidia designs some of the world's most advanced processors. It doesn't manufacture them (check out Taiwan Semiconductor if AI chip-making is your thing) but instead uses a fabless semiconductor model, designing chips that have become integral to the tech industry.
Nvidia's processors account for an estimated 70% to 95% of AI chips, giving the company a massive lead among competitors like Advanced Micro Devices. To stay a few steps ahead of its rivals, Nvidia continues to release new AI chips that tech companies are knocking down its doors to get their hands on.
For example, its Blackwell processor is the next iteration of its AI processor, and Nvidia's CFO, Colette Kress, said on a recent earnings call that the company is ramping up production to keep up.
"Blackwell demand is staggering, and we are racing to scale supply to meet the incredible demand customers are placing on us," Kress said. With its lead already well-established and the company continuing its history of releasing advanced AI processors that outpace rivals and satisfy customers, it's likely there are many more years ahead for Nvidia's growth.
A data centre market that's primed for growth
Having in-demand chips right now is one thing, but parlaying that opportunity into a years-long opportunity is quite another. That's why the massive data centre market is such an important factor for Nvidia.
Nvidia CEO Jensen Huang estimates that data centre spending will accelerate over the next few years as companies aim to dominate AI in cloud computing and develop AI models. Huang said a few months ago that technology companies could spend up to $2 trillion over the next five years as they try to race ahead of each other.
That's a huge number to get your head around, but the largest tech companies are already showing their hand with AI data centre spending. Consider that OpenAI, Oracle, and Softbank recently launched Stargate, a data centre infrastructure plan that involves spending up to $500 billion over the next few years.
And other tech leaders vying to be the king of the AI hill are doing the same. Microsoft just said on its latest earnings call that it would spend $80 billion this year alone on data centre infrastructure, and Meta CEO Mark Zuckerberg said his company is shelling out $65 billion this year. Alphabet, another key AI player, says it'll spend $75 billion this year on AI data centres.
Naysayers will point out that smaller AI start-ups will spend far less and still develop advanced AI models without the need for Nvidia's most advanced processors. DeepSeek shed light on this recently when it released an impressive AI chatbot despite the company's limited resources.
But the long and short of it is that the world's biggest tech companies can't afford to not invest in the best data centres with the most advanced processors. There's too much at stake for them in the $15.7 trillion AI market (by 2030) for them to bootstrap their AI efforts. That bodes well for Nvidia and its AI processors in the coming years.
Nvidia comes out ahead no matter who wins the AI wars
Nvidia isn't the cheapest AI stock, with a forward price-to-earnings (P/E) ratio of 30.6. However, the company has proven that it's a unique leader in the AI processor segment and poised to benefit as tech companies duke it out for AI dominance.
There's no way to guarantee Nvidia's success over the next 10 years, but considering its current position in the market, its ability to continue to attract customers, and the all-out sprint tech companies are making to outpace each other in data centre prowess, Nvidia looks like one of the best AI stocks around.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
