More Chips on the Table

The S&P 500 and Nasdaq 100 were each up ~1% this week on the heels of higher confidence of a Fed cut in December and a rebound in some tech names such as Meta and Nvidia. YTD the S&P500/Nasdaq100 are now +17/+22%. Our NPM Private Market Tracker*, which shows the estimated average price performance of the 50 largest names in our internal Tape D® data is +45% YTD. (Source: NPM; Bloomberg)

Competition continues. It’s not new news that startups, legacy chip companies and hyperscalers have been looking to challenge Nvidia’s dominance. On 12/3, the Wall Street Journal highlighted the playing field, noting that Nvidia’s gross margins of ~70% exceed those of peers and create room for potential competition on price. Startups such as Cerebras Systems, Groq, and Tenstorrent are examples of relatively new companies vying for share, while AMD and Broadcom announced deals with Open AI in October and AMD announced one with Oracle as well. (Source: Company reports, CNBC). Over the last couple of weeks, headlines have caught our eye about hyperscaler efforts to compete with Nvidia.

More chips on the table. On 11/25, The Information reported that Google is pitching cloud customers, including Meta, on using its TPUs instead of Nvidia’s GPUs, eyeing as much as 10% of Nvidia’s annual revenues. On 12/2, Amazon formally launched its Trainium 3 AI accelerator and Trn3 UltraServer instances, saying the offering could reduce training and inference costs by up to 50% (Source: Company reports). Meta is also working on its own MTIA chips (Source: Reuters). Granted, Performance characteristics are different between Nvidia’s GPUs and offerings from Google and Amazon: For example, Google’s TPUs were created for inference and are application-specific, compared with Nvidia’s more general-purpose GPUs (Source: Bloomberg).

Software plays a key role. Chip performance is obviously critical for customers, but so is the software stack that comes with it. Nvidia has standardized the industry around its Cuda software, and that serves as a competitive moat. However, Google/Amazon have developed software (Jax/Neuron) that integrates with other open-source software such as PyTorch (Source: Company reports, The Information).

Frenemies. Even as hyperscalers are developing their own chips, they still rely on Nvidia’s chips for their cloud services, and because many tech companies rely on both, they are unlikely to replace Nvidia GPUs entirely (Source: Bloomberg). Nvidia also noted in its 3Q25 press release that “cloud GPUs are sold out”, so hyperscalers taking share could be more of a question regarding sales farther out in the future. In our view, there is likely not a one-size fits all solution, and there may rather be different solutions at different price points.

BIGGEST MOVERS AND TOPICAL NAMES

Based on our proprietary Tape D® data, the best performers of the large cap names in the private market thus far in 2025 have been Mercor (+785% estimated share price performance), Kalshi (+723%), and Reflection AI (+599%). (Source: NPM)

RECENT EVENTS

• OpenAI declared a “code red” internally to refocus on fixing ChatGPT quality issues amidst competition from Google and Anthropic (Wall Street Journal, 12/2).
• OpenAI announced that it is taking an ownership stake in Thrive Holdings, a company that is rolling up accounting an IT services businesses (New York Times, 12/1). It also agreed to buy Neptune, a startup that makes tools for analyzing progress during AI model training (The Information, 12/4). Sam Altman commented that OpenAI has explored taking a stake in rocket company to unlock space-based data centers (Wall Street Journal, 12/4).
• Nvidia invested $2 billion in Synopsis, which provides software for designing semiconductors. (The Information, 12/2)

NOTABLE CAPITAL RAISES

• K2 Space, a satellite manufacturing company, is in talks to raise a new funding round at a $3 billion valuation (The Information, 12/3).
• Vulcan Elements, a rare earth materials startup, received a $620 million loan from the Pentagon’s Office of Strategic Capital (Pitchbook, 12/4).
• Kalshi, a prediction market, raised a $1 billion series E at an $11 billion valuation (StrictlyVC, 12/2).
• Black Forest Labs, a German start-up that makes AI models for generating and editing images, raised a $300 million Series B at a $3.25 billion valuation (StrictlyVC, 12/1).
• Quantum Systems, a German startup that makes surveillance drones, raised $209 million at a $3 billion valuation (StrictlyVC, 12/1).
• Heven AeroTech, a defense startup building autonomous drones, raised a $100 million Series B at a $1 billion valuation (Pitchbook, 12/2).

NOTABLE EXITS

• SpaceX has indicated it may aim for an IPO in late 2026 (The Information, 12/5).
• Anthropic is reportedly eyeing an IPO in 2026 (Financial Times, 12/2).
• Marvell Technology will acquire Celestial AI for $5.5 billion (Pitchbook, 12/3).