Should Nvidia Worry About AMD and Google Breathing Down Its Neck in 2026?
- - Should Nvidia Worry About AMD and Google Breathing Down Its Neck in 2026?
Keith Speights, The Motley FoolDecember 17, 2025 at 3:04 PM
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Key Points -
AMD has an ambitious growth strategy and is already winning big AI chip deals.
Alphabet's Google Cloud is making significant inroads in the AI chip market with its TPUs.
Nvidia shouldn't ignore the challenge from AMD and Google, but it's likely to continue dominating the market for now.
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Lions reign as king of the jungle (although "king of the savanna" would probable more more accurate). Elvis is still the king of rock and roll. Michael Jackson remains the king of pop. However, if the subject is chips that power artificial intelligence (AI) applications, I'd say Nvidia (NASDAQ: NVDA) is the king.
But the king's perch on the throne just might be at least a little shaky as the new year approaches. Should Nvidia worry about Advanced Micro Devices (NASDAQ: AMD) and Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) breathing down its neck in 2026?
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Nvidia sign in front of a building.
Image source: Nvidia.
AMD's ambitious plans
In November, AMD revealed a strategy to lead the $1 trillion AI and high-performance computing market. The company plans to deliver a revenue compound annual growth rate (CAGR) of greater than 35% over the next three to five years. AMD aims to achieve a revenue CAGR of more than 60% for its data center business.
Such ambitious plans are reminiscent of baseball legend Babe Ruth pointing to deep center field. You only make that kind of move unless you're confident you can back it up. Ruth, of course, proceeded to hit a home run. Can AMD deliver on its growth strategy? It's a definite maybe.
The company is already making progress toward its goal. For example, ChatGPT developer OpenAI will use AMD's Instinct MI450 GPUs in its next-generation AI infrastructure. The first deployment is scheduled for the second half of 2026. This deal also includes AMD issuing warrants for OpenAI to buy up to 160 million shares.
AI cloud powerhouse Oracle (NYSE: ORCL) is also using AMD's GPUs and CPUs with its first publicly available AI supercluster. The initial deployment is set for the third quarter of 2026. Privately held Cohere is integrating AMD's GPUs with its enterprise AI suite.
AMD also won two major contracts with the U.S. Department of Energy. The agency will use AMD's GPUs and CPUs in its Lux and Discovery AI supercomputers.
Google's TPUs are making inroads, too
GPUs aren't the only game in town for powering AI systems, though. Alphabet's Google Cloud unit is also making inroads with its Tensor Processing Units (TPUs).
Apple (NASDAQ: AAPL) revealed last year that its Apple Intelligence generative AI functionality was trained using Google's TPUs rather than Nvidia's GPUs. Google, of course, also uses its TPUs with the widely acclaimed Google Gemini 3.0 large language model (LLM).
More AI leaders are also turning to TPUs. Anthropic is spending tens of billions of dollars to expand its AI compute capacity in 2026 using Google's TPUs. The deal with Google is Anthropic's largest purchase of TPUs so far.
Meta Platforms (NASDAQ: META) is reportedly in talks to use Google's TPUs in its data centers starting in 2027. In the past, Meta has been a major buyer of Nvidia's GPUs.
Google could gain more traction in the AI chip market next year, thanks to its new Ironwood TPUs. Ironwood is four times more powerful than Google's previous highest-performing TPU.
Should Nvidia worry?
Both AMD and Google appear to be gaining momentum in the AI chip market. Should Nvidia worry? Yes and no.
It's always smart for companies to constantly monitor the competition and not rest on their laurels. Nvidia's management should recognize that its market dominance isn't guaranteed to last forever.
However, I don't think Nvidia's top spot in the AI market is in jeopardy. The company doesn't, either, as evidenced by a post on X last month:
We're delighted by Google's success -- they've made great advances in AI and we continue to supply to Google.NVIDIA is a generation ahead of the industry -- it's the only platform that runs every AI model and does it everywhere computing is done.NVIDIA offers greater...
-- NVIDIA Newsroom (@nvidianewsroom) November 25, 2025
In my view, the AI chip market is large enough to support multiple winners. Nvidia will almost certainly remain the king for at least several more years. But either AMD or Google could deserve the title of crown prince.
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Keith Speights has positions in Alphabet, Apple, and Meta Platforms. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, Meta Platforms, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
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