AI Boom Still Early: Why Chip Makers Beyond Nvidia Have Room to Grow

In a recent appearance on The Pomp Podcast, Dan Ives argued that the AI rally is far from its peak, framing it as a multi‑year bull market driven by U.S. dominance over the most valuable layers of the technology stack – the models, software and silicon. This perspective implies that investors who have concentrated only on headline names like Nvidia may be missing sizable opportunities in other parts of the ecosystem.

Nvidia remains the flagship beneficiary of AI demand. The company reported first‑quarter FY27 revenue of $81.6 billion, an 85% year‑over‑year increase, with data‑center sales soaring 92% to $75.2 billion. Management highlighted a "largest infrastructure expansion in human history" and authorized another $80 billion of share repurchases while raising the dividend to $0.25 per share. The stock has risen 62% over the past year and is up 15% YTD, reflecting strong investor confidence. However, Ives cautions that even a "third‑rate Nvidia chip" would still outpace many competitors for at least a year or two, underscoring the depth of Nvidia’s moat.

The cloud giants are also seeing explosive growth. Alphabet posted Q1 FY26 revenue of $109.9 billion, with Google Cloud expanding 63% and its backlog nearing $460 billion. Microsoft disclosed an AI business now generating a $37 billion annual run rate, more than double the prior year, and a commercial performance obligation of $627 billion. These figures illustrate how software providers are monetizing AI at scale, creating a virtuous cycle that fuels further demand for high‑performance compute.

Advanced Micro Devices (AMD) emerges as the most compelling counterpoint to the narrative that Nvidia owns the entire AI hardware market. AMD’s Q1 FY26 revenue reached $10.25 billion, with data‑center sales up 57%. A notable partnership with Meta involves a commitment of up to 6 GW of AMD Instinct GPUs, signaling confidence from a major cloud customer. The stock has outperformed dramatically, climbing 322% over the past year and 118% YTD, reflecting investor enthusiasm for a diversified chip supply chain. Ives’ third‑inning analogy suggests that multiple vendors can capture sizable slices of a still‑growing pie, especially as customers seek to mitigate single‑source risk.

Beyond chips and cloud, utilities are poised to benefit indirectly from AI expansion. Data centers consume massive amounts of electricity, and their power needs will rise in tandem with compute demand. Ives highlighted NextEra Energy, which added 4 GW to its renewable backlog in Q1 and secured a 9.5 GW gas‑fired generation contract under a U.S.–Japan trade deal. The utility projects EPS growth exceeding 8% annually through 2032, and its stock is up 36% over the past year. As AI workloads scale, utilities with exposure to renewable and flexible generation assets may see valuation multiples expand, offering another avenue for investors seeking indirect AI play.

Geopolitical considerations also shape the long‑term outlook. Ives believes that despite tensions between the United States and China, a full decoupling is unlikely because each side relies on the other for critical components of the AI supply chain. While China leads in robotics deployment and power generation, the U.S. retains control over the high‑margin layers—models, software and advanced chips—providing a structural advantage that could sustain superior returns for domestic players.

For investors, the key takeaway is patience and breadth. Selling winners too early could lock in modest gains while leaving upside on the table as AI adoption deepens. Likewise, limiting exposure to only the most obvious AI tickers may overlook opportunities in second‑source chip makers like AMD, networking equipment suppliers, and even power producers positioned to serve data‑center demand. Portfolio construction should therefore reflect a view of AI as an ecosystem rather than a single‑stock bet, aligning position sizes with conviction in each segment’s growth trajectory.

In summary, Dan Ives’ third‑inning metaphor reframes the AI narrative from a short‑term sprint to a prolonged marathon. Nvidia and the big cloud providers will continue to lead, but the expanding demand for compute power creates room for competitors such as AMD and ancillary players like utilities. Investors who diversify across this spectrum stand to capture the majority of the upside as the AI market matures over the coming years.