Nvidia is still the king of AI chips, but the throne is starting to shake a little. A mix of valuation worries, bolder rivals, and restless customers is turning what looked like an untouchable lead into a far more contested race.
A market darling under pressure
Nvidia’s stock slipped about 2.6% on Tuesday as investors once again questioned whether its sky‑high AI premium can hold in the face of real competition and slowing momentum. The chipmaker has become the benchmark for the entire AI trade, so even a modest dip in its shares reverberates across broader tech and AI-linked assets.
Prominent bears have accused companies of stretching the useful life of Nvidia hardware in their books, effectively boosting reported profits and feeding the narrative of an “AI bubble.” Those concerns are now intersecting with a more tangible risk: some of Nvidia’s biggest customers are actively testing alternatives.
Google’s challenge and Meta’s flirtation
Alphabet’s Google has pushed its in‑house AI chips and models into the spotlight, positioning its TPUs and new Gemini model as proof it can compete on both hardware and software. While Nvidia does not build large language models itself, a successful Google stack gives hyperscalers another route that does not rely solely on Nvidia GPUs.
Meta Platforms, one of Nvidia’s marquee AI customers, is now weighing whether to deploy Google’s custom AI chips in its own data centers instead of buying only Nvidia accelerators. Even the possibility of a multibillion‑dollar shift in orders is enough to jolt sentiment around Nvidia’s near‑monopoly on AI infrastructure.
Nvidia fights back in public and in private
Unusually for a company in such a dominant position, Nvidia has gone on the offensive rather than ignoring the noise. On X, it has argued that its GPUs remain a full generation ahead of competing AI chips, including ASIC‑style solutions like Google’s TPUs, and that its Blackwell architecture still sets the pace for performance and flexibility.
Behind the scenes, Nvidia has circulated a detailed memo to Wall Street pushing back on bubble narratives and on claims that demand for its chips could fade more quickly than expected. The message is clear: the company wants investors to believe its ecosystem advantage, software stack, and scalability justify both its margins and its valuation.
Customers, competition, and concentration risk
For now, Nvidia still controls an estimated 80–90% of the AI accelerator market, with its H‑series GPUs forming the backbone of many large data centers. But hyperscalers like Meta and other cloud giants are increasingly sensitive to cost, power use, and supply constraints, and custom chips from Google and others are starting to look like viable bargaining chips.
This shift highlights a structural risk: Nvidia’s largest buyers are also rapidly becoming its most credible competitors as they design their own silicon. If even a small fraction of those orders are redirected to in‑house or rival chips, the market’s assumption of an endlessly steep AI demand curve for Nvidia hardware may need revisiting.
A nervous crown, not a fallen king
Broader markets actually ended higher on Tuesday, with major U.S. indexes logging a third straight day of gains even as Nvidia and other AI chip names lagged. That divergence underlines how investors are beginning to separate enthusiasm for AI as a theme from the question of whether one company can continue to capture most of the profits.
Nvidia still wears the AI crown thanks to its massive installed base, software moat, and technical lead, but the burden of defending that position is growing heavier with every rival announcement and every customer experiment. The story has shifted from “Can anyone catch Nvidia?” to “How much of this boom can Nvidia keep?” and that is why its crown suddenly looks so uneasy.
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