How Can Nvidia Sustain Its Margins?

For the last three years, Nvdia (NASDAQ:NVDA) has reigned supreme as the uncontested leader of the AI revolution, driven by an insatiable global demand for large-scale model training. Nonetheless, the company’s recent strategic move – a monumental $20 billion licensing agreement with startup Groq and the recruitment of its top executives – indicates a significant transformation in the Silicon Valley landscape. As the sector transitions from the “build” stage to the “deploy” stage, Nvidia is starting to mitigate its risks against the impending “inference threat.” But what does this mean for the company?

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From Model Creation to Model Deployment

Up to now, Nvidia’s supremacy has relied on training: the resource-intensive process of educating an AI model with vast datasets. This demands the raw power of advanced GPUs like the H100 and Blackwell. However, the long-term economic advantage of AI resides in inference—the…