In Part One, we looked at how AI could give rise to the Fourth Industrial Revolution.

According to Goldman Sachs, generative AI could raise global GDP by 7%. It could deliver considerable advancement in labour productivity. By their analysis, around two-thirds of occupations could be partly automated by AI.

I’m an optimist. As mentioned last week, technological revolutions create new opportunity. Particularly for those that can harness it. We looked at the sort of companies that could drive AI to produce a meaningful increase in their return on capital.

But what of the picks and shovels? What of those producing the microchips?

After all, we’ve just seen US markets strongly lathered by the success of Nvidia [NASDAQ:NVDA]. Reports have this company expecting up to $10.5 billion in orders alone from Mark Zuckerberg at Meta/Facebook over the next couple of years.

Today, Nvidia is one expensive stock. Sure, there’s rapid growth. When you look at its eye-watering P/E (price-to-earnings ratio), perhaps it’s prudent to look at the E more than the P?

It could grow into its earnings mighty fast. Yet there’s also growing competition. And that’s where opportunities beyond the radar could be lurking.

AI needs a lot of processing power. That’s a given. But Nvidia won’t have that whole market to itself. Though, apparently, this is not troubling CEO Jensen Huang.


Source: Flickr/Nvidia Taiwan


Huang was asked which competitors keep him awake at night:

That shouldn’t keep me up at night—because I should make sure that I’m sufficiently exhausted from working that no one can keep me up at night. That’s really the only thing I can control.’

Nvidia does have a dominant position in the PC graphics-card market, with a market share of about 80%. This is a slower growing sector. AI and potentially one other area has been driving the more rapid growth.

Let’s take a look at some of the other key players that could be about to muscle in…


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