When investors discuss the semiconductor chips driving AI infrastructure, they almost always key on Nvidia () GPU chips. That’s not surprising, given the surge in Nvidia GPU revenue as we share below. Since 2024, GPU revenue has risen by over 1300% while Nvidia shares are up almost 400%. Nvidia has certainly played the lead role in designing AI chips, but there are other types of chips and companies profiting from AI. As seen in the surge of the semiconductor index, the market now recognizes companies that design CPU and Memory chips. To better appreciate the chip boom, we summarize the three distinct chips that an AI server requires.
- GPUs (Graphics Processing Units) handle the heavy compute work. GPUs are the cornerstone for AI as they train and run AI models. Nvidia has an estimated 80%+ market share in AI GPUs. is Nvidia’s primary challenger, though the gap is huge.
- CPUs (Central Processing Units) manage workflows, direct data traffic, and run the software that tells GPUs what to do. and AMD are the largest CPU designers.
- Memory Chips are where the bottleneck often lives. DRAM, particularly High Bandwidth Memory (HBM), sits alongside the GPU and feeds it data fast enough to keep pace with the compute. Without sufficient memory bandwidth, even the GPU idles. , , and are the three companies leading.
From an investment perspective its vital to realize that the AI build-out isn’t a single-chip story. While Nvidia gets the headlines, every GPU they sell requires CPUs and memory chips. However, the three chips’ profit margins differ widely. Nvidia’s GPUs command an approximate 75% margin, while CPUs are closer to 50%, and memory chips are cyclical with a wide 25-50% band.
ADP Points To A Weak But Improving Labor Market
On October 28, 2025, began posting weekly payroll reports based on its clients’ data. Prior to weekly reporting, ADP posted a monthly labor market gauge days before the monthly BLS employment report. ADP’s new weekly report presents the data as a rolling four-week moving average, which tends to smooth weekly variability.
As we share below, courtesy of Bloomberg, the ADP weekly gauge shows a pickup in job growth over the last two months. While positive, the rolling four-week moving average is only around 40k, well below what is considered a healthy job market with growth of 150k to 200k jobs per month. The recent pickup is encouraging, but continues to indicate that the unemployment rate should increase.
This private sector market report on labor conditions is the only widely accessible way to assess the labor market in near real time.
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