Nvidia Stock Stumbles Amid AI Slowdown Fears and Rising Competition
Nvidia’s stock has fallen 12% since November, driven by concerns over slower AI spending and increasing competition from Amazon and Broadcom. Rumors of production delays and China’s antitrust probe add to investor worries, despite long-term optimism for AI growth.
Nvidia’s stock has dropped 12% since its record high in November. This is because investors are worried that AI spending growth will slow down and competition will get tougher. Microsoft and Google’s comments about a possible slowdown in AI spending have made investors more wary.
Even though Nvidia has quickly become the top provider of AI chips, recent events have made people less excited. Tuesday, the company’s shares fell 1.2%, following a trend that began when they hit a high point of $148.88 in early November.
Worries have been raised by reports that Nvidia’s Blackwell AI servers are overheating, which has led to worries about production delays. Even Nvidia’s great earnings report, which beat bullish predictions, couldn’t stop the fall.
At the same time, competition is getting tougher. Amazon just recently announced plans for a machine that will use its Trainium AI chips to compete with Nvidia. Investors are also paying more attention to Broadcom’s AI chips, which are expected to bring in $90 billion over three years.
The heat has been turned up even more after China opened an antitrust probe into Nvidia’s $7bn merger with Mellanox. This investigation could potentially cause the company to plateau in a very vital aspect, though it has been allowing Nvidia to grow.
With all these problems in mind, analysts have not turned sour on AI in the long run. The latest foreseen numbers of JPMorgan reduced the growth of AI infrastructure spending and estimated the spending will be 30% in 2025 and 25% in 2026 but is not as consistent as it has been rising 57% a year ago in 2024.
In the meantime, Big Tech is still significantly investing in AI. Despite the continuing skepticism over AI’s actual value, Microsoft, Meta, and Google have all spent considerably more. The major area of focus for Nvidia’s future is to maintain its position in one of the world’s rapidly evolving markets.
