Huawei seeks to dethrone Nvidia (NVDA) in China by offering alternatives to the graphics processing unit (GPU) maker’s popular artificial intelligence (AI) chips. The chipmaker can’t compete with Nvidia’s large language model (LLM) chips and will instead focus on inference AI chips. These power AI responses from chatbots and similar apps instead of training LLMs like Nvidia’s chips do.
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Huawei is betting on inference AI chips as demand for them will increase as more companies release AI chatbots. The company also argues that demand for LLM training will decrease. It believes AI chatbots will see growing use from consumers while LLM training only needs to happen a limited number of times before the models are complete.
Huawei’s Home Field Advantage Over Nvidia
Huawei also has advantages in China as it’s the country’s preferred chipmaker. That’s due to an ongoing trade war in the U.S. limiting Nvidia’s ability to export powerful AI chips to China. While the chips NVDA sends are still more powerful and versatile than Huawei’s, the company is slowly improving its AI chips with new features and abilities.
Even with export bottlenecks, Nvidia is still the king of AI chips in China. Estimates put orders for NVDA’s AI chips at double what Huawei saw in the country. Granted, this might change with the release of Ascend 910C, Huawei’s newest AI chip that fixes issues in its predecessor.
Huawei vs. Nvidia: Which Is Best for Investors?
While Huawei may improve its AI share in China, that doesn’t mean much for investors as it’s a private company, meaning retail traders can only bet on Nvidia. Fortunately, NVDA is a good pick with an analysts’ consensus rating of Strong Buy and an average price target of $176.86, representing a potential 27.6% upside.
