The semiconductor industry is currently becoming the dominant force in the market, and with the continuous development of artificial intelligence (AI) technology, the demand for related chips is also driving the overall industry into a high-speed growth period. Although Nvidia (NASDAQ: NVDA) still firmly holds the leading position in the high-performance GPU market, investors are shifting their focus to other potential competitors and upstream and downstream companies in the supply chain. Ali Moarabi, senior equity analyst at West End Capital Management, recently stated in an interview that while Nvidia has a leading advantage, the investment opportunities in the market are no longer limited to just this one option. He pointed out that companies like AMD, Broadcom, and ASML are also worth paying attention to, and in some areas, they have already begun to demonstrate their ability to challenge Nvidia.

Leading Tech Industry Shifts to Multi-Vendor Strategy to Reduce Dependency

Nvidia's growth in recent years has mainly come from high-performance GPUs required for AI model training, especially the H100 chip, which has almost become the standard equipment for large tech companies deploying generative AI. The fiscal report for the second quarter of 2025 shows that AI-related business accounts for more than 60% of the company's total revenue, with customers concentrated among hyperscale data center operators such as Microsoft, Amazon, and Google. However, Moarabi raised a key observation: these super-large customers are gradually adopting a multi-vendor strategy to reduce the risk of dependency on a single supplier. In this context, AMD has become the most promising alternative.

AMD and Broadcom's Challenges Are Coming on Strong

As Nvidia's main competitor, Advanced Micro Devices (NASDAQ: AMD) is actively strengthening its layout in the AI field. The company's launched MI355X accelerator chip is considered a strong rival to Nvidia's H100, particularly excelling in AI inference tasks. According to the company's second-quarter fiscal report, data center segment revenue grew nearly 20% compared to the same period last year, reflecting the gradual market recognition of its AI chips. Moarabi said this is a typical catch-up trade; although Nvidia will still maintain its leading position in the short term, AMD already has the strength to capture part of the market share in specific areas, especially for enterprise users who want to introduce multi-vendor systems.

In addition to traditional GPU manufacturers, Broadcom (NASDAQ: AVGO) is also seen as an important player in the AI chip market. Unlike Nvidia and AMD, which focus on standardized GPUs, Broadcom has long collaborated with Google to assist in designing its proprietary TPU (Tensor Processing Unit), a customized chip specifically built for AI applications. Moarabi pointed out that companies like Google, Meta, and Apple are seeking more targeted chip solutions, and Broadcom, with its ASIC (Application-Specific Integrated Circuit) design and integration capabilities, has become one of the biggest beneficiaries in the wave of customized AI chips. As more companies lean toward building dedicated chips to optimize performance and energy efficiency, Broadcom's market position is expected to continue strengthening.

Dutch ASML Holds Lithography Technology

In the core equipment segment of chip manufacturing, ASML Holding N.V. (NASDAQ: ASML) from the Netherlands is an irreplaceable key company. ASML holds a global monopoly on extreme ultraviolet (EUV) lithography technology, and almost all advanced process chip production must rely on its equipment. Although geopolitical risks continue to affect its shipments to China, from TSMC and Samsung to Intel and other foundries, global advanced manufacturing cannot bypass ASML.

ASML Equipment Exempt from 15% U.S. Tariffs

The U.S. and EU have reached a trade agreement to implement tariff exemptions on semiconductor production equipment manufactured in Europe (including ASML's DUV and EUV lithography equipment), avoiding the imposition of a 15% tariff. Without the exemption, the cost of a single EUV machine could increase by up to $40 million, causing significant impact on U.S. foundry and advanced manufacturing investments. This exemption helps maintain the economic viability and competitiveness of U.S. manufacturing. Whether it's Nvidia, AMD, or Broadcom, they ultimately need to rely on ASML's equipment to achieve mass production of their products, highlighting its foundational position in the overall AI chip industry.

From an investment perspective, analyst Moarabi suggests viewing the AI chip industry as a multi-layered ecosystem, rather than focusing solely on Nvidia. Although Nvidia's technological leadership and brand advantages remain significant, in the face of high valuations and customer concentration issues, diversifying investments to companies like AMD, Broadcom, and ASML, which have technological strength and industry support, may yield more stable returns in the long-term growth trend of AI chips. This competition in the chip industry is no longer just Nvidia standing alone, but the entire supply chain jointly ushering in a golden era driven by artificial intelligence.

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