CNBC’s Kai Nicol-Schwarz says NVIDIA Corp. (NASDAQ:NVDA) still leads the AI chip market, but a wave of well-funded startups is building alternatives as demand shifts toward new use cases.

Funding Surge Signals Rising Competition

Europe’s chip startups building alternatives to NVIDIA’s GPUs are targeting large funding rounds as they race to scale in the surging AI boom.

Kai Nicol-Schwarz told CNBC on Monday that AI chip startups are raising record capital as competition intensifies.

Startups globally raised about $8.3 billion in 2026, nearing the previous record of $8.5 billion.

He highlighted major rounds, including Cerebras raising $1 billion and firms like Etched and MatX securing $500 million, while European players such as Axelera have raised more than $200 million.

Shift From Training To Everyday Use

He explained that the market is moving from training AI models to running them in real-world applications.

This shift toward “AI inference” is driving demand for different types of chips optimized for daily use rather than just building models.

Startups Challenge NVIDIA’s Design Advantage

Kai Nicol-Schwarz noted that NVIDIA’s chips, originally built for gaming, were adapted for AI and still dominate.

However, startups argued that these chips were not designed specifically for inference and are developing new architectures to run AI models more efficiently.

“Now NVIDIA’s chips, they were originally designed for gaming. NVIDIA initially developed semiconductors for the gaming segment. They have been really effectively repurposed for AI,” he said

“But the argument of a lot of these chip startups is that these chips weren’t originally designed for AI inference. It’s that, you know, they were designed for another purpose. And so they would say that we need these novel systems architectures to more effectively, to more efficiently run these AI models.”

NVDA Price Action: NVIDIA shares were down 1.07% at $199.52 during premarket trading on Monday, according to Benzinga Pro data.

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