Nvidia (NVDA +0.81%) has led the artificial intelligence (AI) investing sector since 2023. While 2025 wasn't as good a year for Nvidia shareholders as the previous two years, the stock is still up around 30% so far this year. Nvidia is still a dominant force in the AI realm, but questions are arising about other competitors stealing some of Nvidia's market share.
Should Nvidia start to lose its edge over the competition, it may no longer be the best AI stock to own over the next five years. But which stock could overtake it?
Image source: Getty Images.
Nvidia's competitors are taking a different approach to the AI computing problem
Nvidia makes graphics processing units (GPUs), which are computing units that can process multiple calculations in parallel. This makes them perfectly suited for tasks that require a lot of computing power, like artificial intelligence workloads. Nvidia's GPUs have been the most popular of any computing option available since the AI computing build-out started in 2023, but that may change in the future.
One issue Nvidia is having right now is that demand is outpacing its supply. During its third quarter of fiscal year 2026 (ended Oct. 26) earnings release, CEO Jensen Huang noted that the company is "sold out" of cloud GPUs. While some may view this as a good problem to have, I think it's a bit of an issue. Its clients aren't going to decrease their needs just because Nvidia can't supply them. Instead, they are going to look for alternative solutions.
NASDAQ: NVDA
Key Data Points
When customers have to look for alternative solutions to meet their needs, it could open up the door for competition to steal significant market share, as they may find that the alternative products provide similar performance at a lower price point. Two providers that may steal some of Nvidia's market share are AMD (AMD +0.77%) and Broadcom (AVGO +0.44%). AMD is a direct competitor to Nvidia, as it also makes GPUs. AMD's management team recently released guidance for the next five years, and it believes that its data center revenue can increase at a 60% compound annual growth rate (CAGR). For reference, its data center division's revenue growth was a mere 22% during Q3. For AMD to grow that fast, it will need to eat into Nvidia's market share, which it already might be doing.
NASDAQ: AMD
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Broadcom is taking a different approach to the AI computing problem. Rather than designing another GPU, it's partnering directly with the AI hyperscalers to design custom AI computing units with them. The best example of this is Alphabet's (GOOG 0.51%) (GOOGL 0.49%) Tensor Processing Unit (TPU). TPUs and other custom AI computing units aren't designed to handle a wide variety of workloads like GPUs. However, when these computing units only see one workload that they are properly configured for, they can deliver higher performance at a lower cost point. The trade-off of lower price and higher performance for flexibility is a no-brainer for many companies, and Broadcom's approach could eat into Nvidia's market share as workloads become more streamlined.
All of these companies have the potential to steal some of Nvidia's market share over the next five years, but they all have one thing in common.
Taiwan Semiconductor will rise regardless of who the ultimate winner is
None of these companies fabricates its computing units in-house. These companies are known as fabless chip designers. Instead, they farm out the work to a handful of other companies. In the chip production realm, Taiwan Semiconductor Manufacturing (TSM 0.30%) captures nearly all of the work, as it's the largest chip manufacturer by revenue in the world. All three of the providers above often work with Taiwan Semiconductor to obtain cutting-edge chips, and that's unlikely to change in the future, as that industry is nearly impossible to disrupt.
NYSE: TSM
Key Data Points
With Nvidia projecting $3 trillion to $4 trillion annual spend on data centers by 2030, all three of the fabless chip companies could have a significant market opportunity to capture. I'm not sure which will become the ultimate winner. Still, I know that TSMC will be a winner regardless, giving it a strong chance of outperforming Nvidia over the next five years if Nvidia loses market share to some of its competition.
