Nvidia is becoming the new Aramco
You might know Aramco...
Aramco, the Saudi Arabian American Oil Company, stands as a dominant force in the global energy sector as the first oil producer worldwide. Since 1933, operating on a worldwide scale, Aramco has become a geopolitical bottleneck in a world where energy consumption is critical for economic growth. Its dominance has been further bolstered by two key aspects of its business model: (a) vertical integration, as it controls most stages of the oil production process, and (b) strategic partnerships with key industry players to ensure a stable and diverse market presence.
Why should we start to think about Nvidia as the new Aramco?
Nvidia, the American graphic microchip 'fabless' company, stands as a dominant force in the global AI sector as the first high-end GPU producer worldwide. Since 1993, operating on a worldwide scale, Nvidia has become a geopolitical bottleneck in a world where artificial intelligence seems critical for the next wave of economic growth. Its dominance has been further bolstered by two key aspects of its business model: (a) vertical integration, as it controls most stages of the software and hardware production process, and (b) strategic partnerships with key industry players to ensure a stable and diverse market presence.
Sixty years of difference since their creation, but with dominant players securing the trade of one of the rarest global commodities. Literal oil for one, and the proverbial new oil for the other. If you want to understand if Nvidia's current valuation is a bubble or if it will be sustained (and progress even further), understand Aramco's strategic playbook and check how fast Nvidia copies it.
In the early 2000s, we missed the core analogy between Facebook and the Malboro playbook; this one, we get a chance to see play out live–not that, hopefully, Nvidia will become a toxic company.
