The corporate has been the poster youngster for advances in AI, however there could be a brand new sheriff on the town.
There isn’t any query that Nvidia (NVDA 1.99%) has been the principal beneficiary of latest advances in synthetic intelligence (AI). The corporate’s graphics processing units (GPUs) shortly turned the gold normal for generative AI, capturing a surprising 92% of the knowledge heart GPU market, in accordance with market researcher IoT Analytics. Nvidia has parlayed that dominance into 5 consecutive quarters of triple-digit year-over-year gross sales and revenue development.
Many opponents have tried to maintain up with the firm’s relentless tempo of innovation, however none have succeeded. Simply this 12 months, Nvidia revised its product launch cadence from two years to yearly, making it even more durable for rivals to compete.
Nonetheless, a latest entrant into the AI market is making waves and will mark the first actual competitors Nvidia has confronted.

Picture supply: Getty Photos.
The challenger
Cerebras Methods is an AI firm based in 2016, and there have lately been rumblings of an IPO on the horizon. The corporate believes that “AI is the most transformative know-how of our era.”
Cerebras developed the Wafer-Scale Engine (WSE) — a large semiconductor that’s taking a distinct strategy to accelerating AI. The WSE boasts 4 trillion transistors and integrates 900,000 compute cores and 44 gigabytes of Static Random Entry Reminiscence (SRAM) into the chip itself.
Cerebras claims that its distinctive development reduces latency — or the lag ensuing from knowledge transmission — making the third-generation WSE “the world’s quickest commercially obtainable AI coaching and inference resolution.” In August, Cerebras launched what it known as “the world’s quickest AI inference,” which it claims is 20 instances sooner than Nvidia’s GPU-based options at a fraction of the value.
In a press launch that dropped final week, Cerebras up to date its claims, saying it tripled its “industry-leading inference efficiency, setting [a] new all-time report.” The corporate mentioned its exams with Llama 3.2 — the lately upgraded generative AI mannequin from Meta Platforms — had been “16x sooner than any identified GPU resolution, and 68x sooner than hyperscale clouds.”
Does this spell bother for Nvidia?
Whereas AI-centric efforts by Nvidia and Cerebras have some overlap, it is necessary to take a step again and put the rivalry in context.
Nvidia’s chips have a observe report courting again 25 years and have stood the check of time. These GPUs dominate a range of duties and markets, together with online game graphics playing cards, knowledge facilities, earlier branches of AI, and — most lately — generative AI.
Past its processors themselves, Nvidia has taken a extra holistic strategy, creating software program, switches, hyperlinks — and even complete plug-and-play programs — that work collectively to speed up the efficiency of its processors. Moreover, Nvidia is deeply entrenched in the enterprise world, whereas Cerebras is a relative Johnny-come-lately. It is easy for companies to undertake Nvidia’s AI options, that are comparatively simple to deploy.
This represents a problem for Cerebras, as potential prospects should reengineer their programs to include its know-how. The switching costs concerned could also be substantial, which may act as a competitive moat for Nvidia. Moreover, companies are much less desirous to spend closely on know-how that’s unproven and has but to face the check of time.
Finally, there’s the matter of buyer breadth. Nvidia counts many of the most well-known firms in the world as its prospects, although it will get an estimated 46% of its income from simply 4 prospects. Whereas Nvidia is mum about who these are, they’re broadly believed to be Alphabet, Amazon, Meta Platforms, and Microsoft.
Cerebras, on the different hand, derived 83% of its 2023 income from only one buyer — G42 in the United Arab Emirates — which represented 87% of its gross sales throughout the first six months of this 12 months. Any change in path or falling out between the two firms may put Cerebras in dire straits, doubtlessly leaving its different prospects — few although they might be — in a troublesome place.
Maybe extra regarding is the indisputable fact that lawmakers in the U.S. have expressed considerations about G42, citing the firm’s “intensive enterprise relationships with Chinese language army firms, state-owned entities, and the PRC [People’s Republic of China] intelligence companies.” This historical past and considerations of U.S. regulators may restrict Cerebras’ enterprise dealings with G42 and dent its future prospects.
The forest for the bushes
To be clear, Cerebras affords a singular resolution that represents a brand new degree of competitors for Nvidia that its different rivals have but to realize — so it definitely bears watching. Nonetheless, the firm might want to clear an awesome many hurdles earlier than it represents a vital problem to Nvidia.
Cerebras has made a quantity of claims that also must be put to the check. It’ll finally be buyer demand that can determine whether or not Cerebras has what it takes to tackle Nvidia.
Till then, nevertheless, Nvidia stays the king of the AI revolution. Whereas it at present sells for roughly 34 instances subsequent 12 months’s gross sales, Nvidia’s lengthy observe report of success, {industry} dominance, and entrenched place make it the identify to beat.
John Mackey, former CEO of Entire Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Suzanne Frey, an government at Alphabet, is a member of The Motley Idiot’s board of administrators. Randi Zuckerberg, a former director of market growth and spokeswoman for Fb and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of administrators. Danny Vena has positions in Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Idiot has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Idiot recommends the following choices: lengthy January 2026 $395 calls on Microsoft and brief January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.