The first question Nvidia CEO Jensen Huang was due to answer at the AI ​​chipmaker's annual shareholder meeting on Wednesday about how Nvidia handles growing competition.

Although Nvidia unquestionably leads the AI ​​chip market, with more than 80% of market share, competition has intensified. Established tech giants like Intel AND AMD and growing startups like Engraved, BrainAND D-Matrix are all competing for room in a very profitable value space billions.

About 40% of Nvidia's revenue is BELIEVING come from just four companies: Microsoft, Meta, Amazon and Alphabet. All of these companies have the means to fully develop AI chips themselves one day.

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So Nvidia's current customers may one day be its biggest competitors.

Huang addressed the threat of competition without naming any rivals in particular on Wednesday. In response to a question from shareholders, he said Nvidia's strategy was to produce AI chips that have the “lowest total cost of ownership.”

Those five words don't necessarily mean Nvidia chips, which cost over $30,000 each, are cheaper in shop.

Instead, Nvidia's chips may present a “lower total cost” overall when potential customers consider performance, the cost of using the chips and their wider reach.

“The NVIDIA platform is widely available through every major cloud provider and PC manufacturer, creating a large and attractive install base for developers and customers, which makes our platform more valuable to our customers,” said Huang, to CNBC.

^{Nvidia CEO Jensen Huang. (Photo by SAM YEH/AFP via Getty Images)}

Nvidia chips have been around for 30 years, but until recently, they were used as graphics cards.

Huang believed the chips could do more. In 2016, he asked his team to use the chips to build an AI server, which ended being the size of a briefcase and costing $129,000 to make. He then handed over the server to OpenAI as a gift.

Tens of thousands of Nvidia chips now power OpenAI's ChatGPT.

Huang pointed out at the meeting that Nvidia had a head start on AI chips because it started investing in the technology a decade ago, pouring billions of dollars into the effort and adding thousands of engineers to work on it.

That first mover advantage has paid off. Nvidia is now one of those in the world the most valuable companies, reaching a valuation of $3.338 trillion last week.

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