The Two Giants of AI Computing Power: The Seller's Stock Has Increased 9 Times, the Manufacturer's Gross Margin Is Nearly 60%—Which One Should You Bet On?

Question

In the crypto world, two key players in the AI computing power race have recently become hot topics among investors.

First, let’s talk about the “shovel seller”—the company specializing in GPU design. Its stock price has surged more than 9 times in three years, and its latest quarterly revenue hit $57 billion, a whopping 62% year-over-year increase. The main driver has been the frenzied sales of the Blackwell platform. However, there’s a hidden risk: 61% of its sales rely on just four major clients, all of whom are now working on developing their own chips.

Now, let’s look at the “shovel maker”—the foundry giant that controls over 70% of advanced process capacity. Last quarter, its revenue rose 40.8%, with a gross margin as high as 59.5%, showing solid profitability. Next year, they plan to invest $40-42 billion to expand capacity—a significant move.

In terms of valuation, the two are similar, both trading at about 23-24x projected 2026 earnings. The foundry is more resilient to geopolitical risks, while the GPU company has a higher growth ceiling—but its customer concentration is always a ticking time bomb. Which one to choose? It depends on whether you value certainty or explosive growth more.

ReverseTradingGuru · Accepted Answer

The company selling shovels is just living off its old capital now. Its four major clients are all developing their own products; isn’t this just digging their own grave... On the other hand, contract manufacturers are actually more reliable—a 60% gross margin is no joke.

GasFeeVictim · Answer

The shovel seller is indeed crazy, but 61% is held by four major holders... That must be tough. If they turn around and start in-house development, you're done. On the other hand, the OEM side is actually much more stable—who would dare challenge the control over 70% of the production capacity? I still trust this kind of strong monopoly position more.

DegenDreamer · Answer

It's exciting when the "pick-and-shovel" company's stock price skyrockets, but a 61% customer concentration is really intense. Others have already started developing their own products... Although the growth rate for contract manufacturers isn't as explosive, their business is solid. A 59.5% gross margin—who can compete with that? I still prefer long-term stability.

BearMarketSurvivor · Answer

The growth ceiling for selling shovels is high, but the customer concentration is too scary. The fact that the four major clients are all developing their own chips is bound to become a pitfall sooner or later... It's better to bet on foundries. With 70% capacity monopoly and 59.5% gross margin, stability is all that matters.

Anon32942 · Answer

Selling shovels is satisfying, but the fact that four major clients are developing their own chips is really a sword hanging over our heads... Being a foundry may not be as exciting, but it's a stable way to make a living. You get what it means when you control 70% of the production capacity, right?

CafeMinor · Answer

The rapid growth from "selling shovels" is certainly enjoyable, but the threat of the four major clients developing their own chips still hangs over us... On the foundry side, while it's not as glamorous, with 70% capacity monopoly and a 59.5% gross margin, stability is truly king.