Networking Supplants Computing Power as AI Bottleneck

Nvidia and its peers in the AI infrastructure space are gaining momentum as networking becomes the critical layer of artificial intelligence, according to Citi analysts.

The shift in focus from raw computing power to efficient data movement is creating a positive outlook for companies such as Nvidia (), Broadcom (), Arista Networks (), Lumentum (), Coherent (), Marvell Technology () and Astera Labs (), Citi said.

Citi noted that AI systems are expanding rapidly, with trillions of parameters and larger context windows becoming increasingly common. This growth has led to a bottleneck in efficiently moving data between chips, servers, racks, and data centers.

'The future AI winner is not necessarily the company with the fastest processor, but the company that can move data most efficiently throughout the entire system,' Citi analysts said.

Nvidia's concept of 'AI factories', data centers designed around data flows connecting compute, memory, networking, storage, and security, is also gaining traction. This shift could lead to more AI infrastructure value being generated by companies that optimize the entire data movement stack rather than just supplying standalone processors.