Nvidia’s buying spree: Building a fortress around AI

Nvidia has again made headlines, with two bold moves that strengthen its dominance across the AI ecosystem: acquiring a stake in Intel and pledging an unprecedented investment in OpenAI. 

Leveraging Intel’s capacity to de-risk manufacturing

Nvidia’s purchase of a 4% stake in Intel represents more than just a financial investment. It is a strategic bet on securing access to advanced semiconductor fabrication capacity outside of Asia. With geopolitical tensions rising and risks around dependence on Taiwanese foundries escalating, leveraging Intel’s US-based manufacturing helps de-risk Nvidia’s supply chain. The move also signals closer alignment between two historical rivals as Washington pushes to “reshore” critical chipmaking. For Nvidia, it ensures redundancy in production and a buffer against future disruptions stemming from US-China competition.

A $100 billion pledge to OpenAI

At the same time, Nvidia pledged up to $100 billion to OpenAI, effectively binding itself to the world’s leading AI developer. The structure of this relationship highlights a circular flow of capital: Nvidia injects funds into OpenAI, which in turn relies heavily on Nvidia GPUs to power its large-scale models and services. In effect, Nvidia is both the supplier and an enabler of its biggest customer, embedding itself upstream and downstream in the AI supply chain.

This kind of vertical entrenchment not only guarantees sustained chip demand, but also gives Nvidia influence over how AI platforms evolve and are deployed commercially. It reflects a strategy not just of selling hardware, but of shaping the entire ecosystem.

Bigger moat, higher barriers, less dynamism

These moves materially widen Nvidia’s competitive moat. By controlling supply, securing demand, and reinvesting profits into the platforms that rely on its chips, the company raises barriers to entry for rivals. Start-ups or even large incumbents without equivalent scale will struggle to break into an ecosystem increasingly tied to Nvidia’s architecture.

The flipside is a potential stifling of dynamism and innovation within the US tech sector. Concentration of capital, talent, and infrastructure around one firm can dampen competitive forces. 

Strategic importance offsets antitrust risk

Normally, such consolidation would draw antitrust scrutiny. Yet Nvidia’s unique role in US strategic planning likely mitigates regulatory risk. As Washington leans on technology as a pillar of economic statecraft, Nvidia has become an indispensable partner in preserving US technological supremacy against China. The company’s investments align neatly with government incentives around domestic chipmaking and AI leadership.

In this new age of geopolitics, where public funds and political will are directed at technological advantage, the benefits Nvidia confers to US national security may outweigh concerns about anticompetitive behaviour.

Implications for Nvidia’s growth

For investors, the implications are clear. By securing its manufacturing base, embedding itself in AI’s leading developer, and raising competitive barriers, Nvidia is positioning for robust top-line growth through sustained chip demand. Simultaneously, efficiency gains from greater manufacturing security and ecosystem entrenchment could support margins, bolstering the bottom line.

From a technical perspective, Nvidia is approaching its record highs and a crucial resistance level at approximately $184 per share. A break of this level could open a run towards $200 per share. Meanwhile, technical support appears around $164.

(Source: Trading View)
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