Nvidia increasingly dominant in the AI supply chain

An important role in the AI supply chain is obviously played by microchips, and in this sector, Nvidia now dominates almost unchallenged. 

There are several microchip manufacturers, but those to be used for artificial intelligence require great computing power and speed. Nvidia is literally dominating this specific sector. 

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The Supermicro case

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Super Micro Computer, also known simply as Supermicro, is a US giant that produces servers, including for the AI sector. 

Founded in 1993 in the heart of Silicon Valley, California, it has more than 5,000 employees and an annual revenue that exceeds 7 billion dollars. 

It is listed on the stock exchange on Nasdaq with the ticker SMCI, and it has recently made headlines for a 44% drop in two days. 

On Tuesday, October 29, it had closed the stock market session with a price above $49, but subsequently, due to very disappointing economic data, its price first plummeted below $33 the next day, and then continued the fall on Thursday and Friday to the current $26.

Just think that at the beginning of the year the price of its shares had risen from $28 to almost $123 in just over two months, then settled around $80 until mid-July. Since then it first fell below $40, and then plummeted even below $30.

The current price, however, is still higher than at the beginning of the bullrun of 2023, given that two years ago it was just slightly above $8.

Nvidia’s Intervention: the Dominance of the AI Supply Chain

For some time now, the Supermicro servers dedicated to AI have been equipped with Nvidia microchips. 

The problem is that the company in trouble risks perhaps even going bankrupt, and so Nvidia has intervened to restructure its orders, reshaping the supply chain of intelligenza artificiale.

If Supermicro is in crisis, on the other hand, Nvidia is doing great. 

By now, it dominates the AI supply chain with its microchips that dominate this market. 

AI needs very fast processors, and above all with really high computing power. 

Nvidia has enormous experience in this field, thanks to the years spent working on increasingly powerful and high-performance video cards.

And so now it not only dominates the microchip market for AI, but it can even intervene in seemingly desperate cases like that of Supermicro to pull the chestnuts out of the fire with its economic and financial power. 

Nvidia on the stock exchange

While the stock market value of Supermicro almost halved last week, that of Nvidia decreased by only 3%.

Furthermore, compared to a month ago, it has risen by 11%.

The 2024 of Nvidia on the stock market was characterized by an initial period of euphoria, culminating in June with the surpassing of the $140 price, followed by a brief correction ending at the beginning of August. 

Since then, the price has returned to its highs, so much so that on October 21 it even exceeded $144 for a brief moment.

The current $135 is still very close to the all-time highs of a couple of weeks ago, and it is much higher than the $49 with which it had opened the year. 

It is also worth noting that 2022 closed below $15, after having recorded an all-time high above $34 in 2021, so 2023 and 2024 have been years with truly remarkable growth, even surpassing that of the price of Bitcoin. 

The rivals of Nvidia in the AI supply chain

Supermicro is not a competitor of Nvidia, because Supermicro produces the servers, while Nvidia produces the microchips. 

Currently, especially in the stock market, Nvidia does not seem to have rivals, even though there are many other chip manufacturers.

One of the most famous is certainly Intel, whose stock price during 2024, however, has fallen from $49 to $23. 

Another famous microchip manufacturer is the Taiwanese TSMC, whose shares, on the other hand, have shown strong growth in the stock market this year, rising from $102 to $192. 

So there are microchip manufacturers that suffer from competition, and others that instead soar driven by the AI sector. 

Nvidia is the one soaring more than all the others, to the point of becoming dominant in this sector. Suffice it to say that by now, in terms of market capitalization, it is the second largest company in the world, surpassed only by Apple, and ahead of giants like Microsoft, Alphabet (formerly Google), and Amazon. 

By now Nvidia is so powerful that it can even deal with the problems of the entire artificial intelligence sector, probably even on a global level. Its rescue of Supermicro reveals that Nvidia alone can now make a difference in this industry, even if it is limited to producing microchips.