Nvidia stock (NVDA) fell as much as 5% on Tuesday morning, seemingly in the opposite direction of other top tech stocks. While shares in other major tech companies like Alphabet, Apple, and even AMD are trading higher, NVDA has slacked behind, leaving investors worried and confused.
On Tuesday, shares of NVDA came under pressure after a The Information reported that Meta Platforms is in talks to spend billions on Google’s AI chips. The Alphabet-owned company’s challenge to Nvidia’s dominance fueled the latter’s latest decline. Additionally, the Information also said Google is pitching its other cloud customers to sell them TPUs. Such a move could help Google steal as much as 10% of Nvidia’s annual revenue.
Furthermore, Nvidia is also facing increased competition from Advanced Micro Devices (AMD). Year-to-date, AMD is up over 78%, while Nvidia is up just over 35%. AMD’s current AI chips have made little impact on the dominance of Nvidia’s Blackwell hardware. However, the MI400 series—which includes the MI450—will be AMD’s first rack-scale, 72-processor AI server offering. That could make it a more serious rival, allowing its stock to boom compared to NVDA shares.
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Nvidia (NVDA) has been subject to criticism over its AI deals, however, the company insists there needn’t be concern. In a memo sent to Wall Street analysts over the weekend, the company sought to dispel some of these concerns and insist their investments will be worthwhile. “NVIDIA is completely transparent about strategic investments … the companies in NVIDIA’s strategic investment portfolio are growing their own revenues rapidly, indicating a path to profitability and strong underlying customer demand for AI applications,” Nvidi said in the memo.
Fortunately, despite the dip, Wall Street does remain bullish behind NVDA. Raymond James 5-star analyst Simon Leopold says that the company will continue to reap the benefit from the growing AI bubble. “We are AI bulls and believe that logic semiconductors will contribute to global secular growth,” he said this past week. “Recent vendor financing and circular investments among model builders, equipment suppliers, and cloud operators have understandably led to increased skepticism and higher scrutiny around ROI by investors.”