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Nvidia has consolidated itself at the heart of the AI boom with a monopoly on the most powerful chips to train and run models, but a growing number of startups are determined to challenge the company’s supremacy.
And more and more investors are devoting colossal sums of money to it. In 2026, AI chip startups have raised $8.3 billion in funding globally, according to Dealroom. Barring a near-total collapse of the market, the sector is likely to see record sums pumped into it this year.
So what is causing this spike?
While Nvidia’s graphics processing units (GPUs), originally designed for gaming, have been effectively repurposed for AI training, the focus is now shifting to the most effective ways to actually deploy the technology in applications, known as AI inference.
The argument for these chip newcomers is this: GPUs were not specifically designed for AI, and therefore a new system architecture will result in significant power and cost savings.
“Inference is now dominant, and the existing GPU architecture was not designed for that in the most significant way at scale,” Patrick Schneider-Sikorsky, director of the NATO Innovation Fund (NIF), which has invested in British AI chip startup Fractile, told me.
Nvidia, which has enormous advantages as the world’s most valuable company with a nearly unlimited cash reserve, is still in the race to develop new chips to power AI.
In December, the company assets acquired from an AI inference startup Groq for $20 billion and announced that it had invested 4 billion dollars into two companies developing photonics technology in March.
The chip giant also spent more than $18 billion on research and development in its last full fiscal year, ending January 2026.
Startup funding
But investors haven’t been deterred from pouring money into new AI chip technology, often untested on a large scale.
In the US – where many of the biggest rounds have been raised – Cerebras Systems raised $1 billion in February, with $500 million in 2026 for MatX, Ayar Labs and Etched.
European companies have raised relatively modest amounts, but Axelera and Olix have both raised more than $200 million this year. Others, including Euclyd and Optalysys told me they were planning tours at least $100 million in 2026, just like Fractile and Arago, according to reports.
“It’s no longer a niche bet,” said Carlos Espinal, managing partner of European VC Seedcamp, which backed chip startup Vaire Computing. “It’s becoming a critical part of how people think about AI infrastructure.”
Latest updates
Both Anthropic and OpenAI have announced major expansion plans in the UK. Anthropic unveiled a new office space for 800 people, while OpenAI announced that it would open its first permanent office in London with capacity for over 500 team members.
TSMC announced a 58% increase in first-quarter profit on Thursday, beat estimates and break a new record as demand for artificial intelligence chips remained strong.
OpenAI has abandoned its plan to lease capacity directly from a Norwegian data center, with Microsoft takes over the extra calculation, days after confirming it had paused a similar project in the UK. The manufacturer of ChatGPT would rather rent the capacity to Microsoftthe company told CNBC.
Amazon announced Tuesday that it would acquire Globalstar in a deal worth approximately $11.57 billion, as it seeks to give a boost to its nascent Leo satellite internet business and compete with Elon Musk’s SpaceX.
Uber agreed on Friday to buy another 4.5% of shares in German food delivery company Delivery Hero of the company’s largest shareholder Prosus.
Action of the week
ASML stock fell after the company reported earnings on Wednesday.
ASML the stock has been falling since results announced on Wednesday, although it raised its 2026 sales forecast and beat revenue and profit expectations for the first quarter.
Skyrocketing expectations around the AI boom likely caused this backlash, alongside tightening restrictions on export controls, which resulted in a decline in the percentage of net sales to China.