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Oct. 17, 2025 1:54 PM ETNVIDIA Corporation (NVDA) Stock, , , , , , , , , , ,

Summary

• Nvidia Corporation boasts exceptionally high profit margins, but this profitability will attract competition and customer efforts to diversify away from its ecosystem.
• NVDA’s moat is rooted in its CUDA programming model and ecosystem, not just hardware, yet rivals like AMD and custom chipmakers are making inroads.
• Major AI players, including OpenAI and xAI, are investing in alternatives to NVDA, while tech giants like Amazon and Google are developing their own chips.
• Despite NVDA’s stellar growth and influence, mounting competition and diversification efforts could pressure its margins and challenge its market dominance.

Richard Drury/DigitalVision via Getty Images

Thesis

Believe it or not, high profit margins can make me nervous. Basic economic theory states that profits will attract competition that then drives prices downward and eventually consumes the profit margin. Real-world economics is more complex

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