Nvidia Shares Dip Amid Rising Competition in AI Chip Market

Nvidia's stock (NVDA) fell as much as 5% on Tuesday, diverging from the broader tech rally that lifted peers like Alphabet, Apple, and AMD. The decline follows reports that Meta Platforms is negotiating a multibillion-dollar deal for Google's AI chips, potentially eroding Nvidia's market dominance. Google's efforts to sell its tensor processing units (TPUs) to cloud customers could further dent Nvidia's revenue by up to 10% annually.

Advanced Micro Devices (AMD) is also emerging as a formidable competitor, with its stock surging 78% year-to-date compared to Nvidia's 35% gain. While AMD's current AI chips haven't challenged Nvidia's Blackwell hardware, its upcoming MI400 series—featuring rack-scale, 72-processor servers—could shift the balance of power in the AI accelerator market.

Nvidia has sought to reassure Wall Street, circulating a memo to analysts dismissing concerns about its AI deals. Yet, the specter of heightened competition looms large over the chipmaker's once-unassailable position.