NVIDIA's move into AI server design is creating competition for traditional server manufacturers and making it more challenging for customers to switch to alternative products.

According to a report by The Information on Wednesday, NVIDIA plans to design server racks for its upcoming GB200 flagship AI chip, a task traditionally handled by server designers like Dell, HPE, and Supermicro.

While companies like Supermicro have benefited from the growing sales of NVIDIA chips, this new strategy may put pressure on their profit margins.

NVIDIA's initiative is part of several moves aimed at leveraging its strong market position to create new revenue and profit streams, which could make it more difficult for its chip customers to switch to alternative products.

Earlier this year, NVIDIA requested that Microsoft use its server rack designs. However, Microsoft wanted to use its own designs, leading to a standoff that eventually ended with NVIDIA conceding.

The report, based on interviews with two NVIDIA employees involved in the project, noted that none of the mentioned companies have commented on the matter. On Tuesday, stocks of server companies and NVIDIA surged, with NVIDIA's market capitalization surpassing $3.33 trillion, making it the world's most valuable company.