Nvidia’s Growth Momentum Is Unlikely to Be Impacted by Competition in the Near Term

When Nvidia (NVDA) reported its second-quarter fiscal 2027 results, the company commanded a gross margin of 75%. This, in itself, is the biggest validation of its moat. Nvidia's innovation edge coupled with strong demand has already translated into healthy margins and cash flows. From an investment perspective, the key question is whether Nvidia can maintain that edge and continue to be the biggest beneficiary of the artificial intelligence (AI) infrastructure buildout.

Given the addressable market of the AI revolution, there are bound to be challengers. For example, DeepSeek recently released an AI chip software developed with Huawei. This collaboration aims at technology that can replace Nvidia's own solutions. The new toolkit is open-source and includes TileLang, which some consider to be China's response to Nvidia's CUDA.