As big tech companies like Intel and Google delve into creating their silicon to power AI technologies, Nvidia continues to dominate the industry, not through hardware alone but with a crucial, often underappreciated weapon: its software ecosystem.

Alex Kantrowitz, founder of Big Technology and a CNBC contributor, recently explained why Nvidia remains a step ahead in the fiercely competitive AI market. Despite Intel’s announcements touting the prowess of its chips, Kantrowitz suggests that Nvidia’s real advantage lies in its comprehensive software suite, which is critical for developing AI models. “Intel can tout the power of its chips all it wants, but without a solid software strategy, it’s playing catch-up,” Kantrowitz said.

Nvidia has become synonymous with high-performance computing related to AI. Developers rely heavily on Nvidia’s software to train and deploy AI models, creating a lock-in effect where switching costs are high. This ecosystem integration makes Nvidia’s platform exceptionally sticky; transitioning to a competitor like Intel would require significant performance leaps to justify the switch.

“The inertia within the developer community benefits Nvidia immensely,” Kantrowitz explained. “For many, moving away from Nvidia’s integrated software and hardware environment would involve not just adopting new technology but revamping existing workflows, which is neither simple nor cost-effective.”

This discussion arises amid broader tech industry trends where companies increasingly seek to control more of their technology stack. For example, Google has been building its own chips to better integrate its hardware and software capabilities, particularly for running large-scale AI models more efficiently. This move is crucial for maintaining competitiveness in the cloud sector and beyond.

“The narrative that Google is somehow in trouble is overstated,” Kantrowitz added. While Google faces challenges, particularly around margin pressures as it expands its hardware ambitions, these are balanced by significant opportunities in sectors like cloud computing and AI services.

Under CEO Andy Jassy, Amazon has focused on streamlining operations post-pandemic overexpansion. Kantrowitz noted that Amazon had to pull back from an unsustainable aggressive expansion strategy in a post-COVID-19 world where e-commerce growth normalized. “Amazon’s recent recalibrations are about finding a new equilibrium where it can continue to innovate without the bloat of pandemic-era excesses,” he stated.

Companies like Apple and Tesla continue to navigate their challenges in the broader landscape. Apple’s struggle to break into new categories like autonomous cars highlights cultural rigidities that stymie innovation compared to more flexible tech giants.

As the tech giants pivot and adapt to the ever-evolving demands of AI and machine learning, Nvidia’s position looks robust, underpinned by its dual strengths in hardware and, crucially, in software. This combination secures its current dominance and smartly positions it for future growth in an increasingly AI-driven world.