Nvidia's Strategic Shift: From Chip Sales to Cloud Revenue Sharing
GavinSBaker · x · 2026-08-05
Investor Gavin Baker argues that Nvidia is no longer just a chip company. In the current AI hardware cycle, the power dynamic of semiconductor supply allocation has fundamentally shifted.
Historically, major buyers like Apple could break long-term agreements (LTAs) without consequence. Today, at least four massive buyers plus numerous AI startups are competing for compute. Game theory suggests this makes memory LTAs highly durable. Consequently, Nvidia is positioned to build a significant cloud business via revenue shares, explaining its seemingly unusual valuation multiple.
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