Everyone wants to challenge NVIDIA.

Recently, several media outlets have promoted the idea that the king of AI Chips, NVIDIA, will soon face more intense competition, as major technology companies such as Broadcom (AVGO.O) and Marvell Technology (MRVL.O) are helping other companies develop better custom AI chips.

Last week, Broadcom's stocks soared 24% in one day. CEO Hock Tan painted an extremely optimistic picture of the AI chip market during the company's Earnings Reports conference call, stating that the opportunities in this market will be 'very huge' in the coming years. He mentioned that by fiscal year 2027, the opportunities for Broadcom's three main technology customers in the AI chip market will grow from $15 billion to $20 billion in fiscal year 2024 to $60 billion to $90 billion and added that Broadcom will capture a 'reasonable share.'

After Broadcom's Earnings Reports were released, NVIDIA's (NVDA.O) stock price immediately fell. Some investors may speculate from Chen's comments that Broadcom could become a strong competitor to NVIDIA.

But how serious is the threat of custom AI chips to NVIDIA? The answer is: not very serious.

Broadcom's actual financial performance and this quarter's revenue guidance were generally in line with expectations. However, this outlook is a forecast for three years ahead and does not represent the company’s ability to capture a large market share. The further the forecast is, the greater the market's uncertainty.

Amazon's Cloud Computing Service (AWS) launched its own AI chips back in 2019, while Google introduced its AI accelerator even earlier in 2015 and has released multiple generations of products. However, despite this, NVIDIA has still won almost all the AI chip business.

NVIDIA has the most advanced and mature technology stack, with its Hardware, Software, and networking solutions having been optimized and refined over more than a decade, reaching perfection.

After speaking with founders of AI startups or enterprise technology leaders, they unanimously stated that choosing the NVIDIA platform to build their Business is a safer choice. Porting AI Software to other chip architectures is not an easy task, and issues and vulnerabilities will always arise during the process. Using NVIDIA's more powerful AI GPU is clearly more prudent than risking some cost savings.

If companies choose chips from Amazon (AMZN.O) or Alphabet (GOOGL.O), they will be locked into a single Cloud Computing Service provider, and the risk of chips being discontinued in the future cannot be ignored. NVIDIA performs best in backward compatibility, which means that customers using NVIDIA will not waste their significant investments in Software due to the release of faster products.

Although no company can guarantee to lead forever, NVIDIA has never missed a mark to date. Since the end of last year, NVIDIA has accelerated its pace of innovation, shifting from a two-year product release cycle to a one-year cycle.

Earlier this month, during an interview with Bloomberg News, Amazon Cloud Computing Service CEO Matt Garman was asked if NVIDIA has a 95% market share in AI, and he jokingly responded, "I think it might be higher than that." It has been five years since AWS entered the market.

On Tuesday, Morgan Stanley's technology team estimated that the market share of custom AI Chips will rise from 11% this year to 15% by 2030, with the remaining market still dominated by AI GPUs (NVIDIA's stronghold). This indicates that by the end of this century, NVIDIA will still dominate the thriving AI Chip market.

Investors should also take note of this. Although Broadcom's potential in the AI Chip market is exciting, NVIDIA's leading position is difficult to shake in the short term.