TLDR
- Dan Niles turned bullish on NVIDIA after the China write-down and growing inference demand, with Google reporting 50x token generation increase in May
- NVIDIA and HPE launched a new “AI Factory Stack” on July 23, 2025 to accelerate AI adoption across industries
- Over $1 billion worth of NVIDIA AI chips have been smuggled to China despite Trump-era export controls
- NVIDIA briefly became the world’s first $4 trillion company before recent stock volatility
- Competition is heating up as Apple, Qualcomm, and AMD compete for TSMC’s 3nm capacity while Amazon develops Trainium2 AI chips
Dan Niles from Niles Investment Management recently flipped his stance on NVIDIA. The portfolio manager explained his bullish turn during a CNBC appearance.
Two key factors drove his change of heart. First was the company’s China write-down following new US government restrictions on AI chip sales.
Second was the shifting dynamics in AI spending. Training expenditures are slowing while inference demand picks up steam.
“So training spending is slowing down, but you finally had inference spending picking up,” Niles explained. People are actively using ChatGPT, OpenAI, and Google’s Gemini for daily tasks.
The numbers back up this trend. Google reported a 50x increase in token generation during May compared to the previous year.
Microsoft showed similar growth patterns. The company saw a 5x increase in token generation, building on its 2019 OpenAI investment.
Niles uses Google’s Gemini himself. He estimates using it 10 to 20 times daily, reflecting broader consumer adoption.
The China write-down actually helped derisk the company’s forecasts. It removed uncertainty around potential revenue impacts from export restrictions.
President Trump’s Middle East deals also boosted sovereign AI demand. These developments created multiple tailwinds for the chip maker.
Product Innovation Continues
On July 23, 2025, NVIDIA partnered with Hewlett Packard Enterprise on a new initiative. They launched the “AI Factory Stack” to speed up AI adoption across industries.
The stack leverages NVIDIA’s Omniverse and AI agent technologies. It targets companies looking to integrate AI into their operations.
This launch comes as NVIDIA briefly became the world’s first $4 trillion company. Market volatility has since affected the stock price.
CEO Jensen Huang has been promoting AI benefits globally. He’s made appearances in both Washington, DC, and Beijing.
His efforts highlight the company’s investment in advancing AI power worldwide. The strategy aims to expand market opportunities despite regulatory challenges.
Competition and Challenges Mount
The competitive landscape is shifting rapidly. Major players like Apple, Qualcomm, and AMD are competing for TSMC’s 3nm capacity.
This competition could limit NVIDIA’s access to advanced manufacturing processes. The company also relies on TSMC’s 3nm nodes for its chips.
Amazon is developing direct competition with Trainium2 AI chips. These chips could offer cost savings and superior computational power.
Such alternatives might shift AI workloads away from NVIDIA’s offerings. The company faces pressure from multiple directions.
Export controls remain a persistent challenge. Over $1 billion worth of NVIDIA AI chips have reportedly been smuggled to China.
This smuggling operation underscores ongoing tensions in US-China tech relations. It also demonstrates continued demand despite restrictions.
Mar Vista Global Quality Strategy noted investor concerns over DeepSeek’s efficiency gains. However, they believe these concerns proved overstated.
Demand for NVIDIA’s Blackwell platform remains strong. The growing complexity of language models drives this demand.
Reasoning tasks require up to 10 times more compute power than training conventional models. This creates opportunities for increased chip sales.
The AI market is still in early stages of infrastructure build-out. NVIDIA remains well-positioned as the industry standard for accelerated computing.
Recent reports detail strong revenues and continued product innovation. The company is expanding into robotics and AI-driven simulation.
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