The One AI Risk Nvidia Bulls Keep Pretending Isn’t Real - Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL), NVIDIA (NASDAQ:NVDA)

Everyone on Wall Street has the same Nvidia Corp (NASDAQ:NVDA) debate — "how big is AI demand?" — and almost no one is asking the only question that actually matters: how long can Nvidia keep taxing hyperscalers at 70%+ margins before they revolt? Because the real threat to Nvidia isn't a competing GPU. It's Alphabet Inc‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google's TPU — and what it represents: the moment hyperscalers stop outsourcing the most profitable part of AI.

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TPUs Aren't Trying To Beat Nvidia — They're Trying To Own The Margin

Google isn't scaling TPUs to win a hardware beauty contest — it's scaling them to stop wiring billions in compute spend to Nvidia every quarter. TPUs let Google run AI on its terms, on its infrastructure, at its costs. And hyperscalers have finally internalized the Apple Inc (NASDAQ:AAPL) doctrine: platform owners shouldn't pay suppliers premium margins forever.

So TPUs don't need to match GPUs. They only need to hit "good enough" for large, in-house workloads — at a fraction of Nvidia's price. That's how pricing power erodes in slow motion. One training job at a time.

If Google Goes First, Everyone Goes

This is the risk Nvidia bulls keep waving away. The moment hyperscalers know that custom silicon structurally improves gross margins, none of them will volunteer to remain the company still paying Nvidia full freight. Amazon.com Inc (NASDAQ:AMZN) has Trainium and Inferentia. Meta Platforms Inc (NASDAQ:META) has MTIA. Microsoft Corp (NASDAQ:MSFT) is funding Maia. The trend isn't speculative — it's already happening. Nobody wants to be the last one paying the GPU toll.

Nvidia doesn't need to lose compute share to lose margin leadership. It only needs hyperscalers to build alternatives just credible enough to set the price ceiling.

Investor Takeaway

The AI demand story is bulletproof. The AI pricing power story is not. Nvidia isn't at risk of becoming obsolete — it's at risk of becoming negotiable. And once hyperscalers have real leverage, "70% margins forever" stops being a religion and starts being a memory.

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