Nvidia ( NVDA ) shares fell more than 2% early Tuesday as investors grew cautious that the AI spending that fueled the surge could wane or spread to rivals.
The AI chipmaker’s shares fell about 14% from its record-high closing price of $148.88 in early November.
Nvidia has made a meteoric rise to the top, from a graphics card company used primarily for video games to the world’s largest supplier of AI chips, as Big Tech goes all-in on generative artificial intelligence. In 2024, it traded places with Apple (AAPL) as the world’s most valuable company, and in early November it replaced the once-dominant Intel (INTC) in the Dow Jones Industrial Average (^DJI). Wedbush analyst Dan Ives said in a note last week that he expects Nvidia’s market cap to exceed $4 trillion by 2025.
But after November’s record close, Nvidia shares started falling after commentary from Microsoft (MSFT) and Google (GOOG) indicated their AI spending will grow at a slower pace going forward. Rumors of the latest Blackwell AI servers overheating fueled fears of further delays in ramping up production, sending shares down even further. Even Nvidia’s most recent earnings report, which exceeded the already high expectations of bullish analysts, did little to help the stock’s performance.
Adding to Nvidia’s troubles, China’s competition authority said last week it has launched an antitrust investigation into Nvidia’s $7 billion acquisition of networking technology company Mellanox.
Meanwhile, competition is increasing. Amazon (AMZN) said in early December that it is building a supercomputer with its new servers and its own Trainium AI chips — which it hopes can become a viable alternative to Nvidia. Broadcom (AVGO) said in its latest earnings report that its partnership with hyperscalers to supply custom AI chips called XPUs will generate as much as $90 billion over the next three years. This will send Nvidia’s stock price rising in the opposite direction, despite analyst commentary that Broadcom’s success will not come at Nvidia’s expense.
The AI bills of major tech companies are still rising to enormous amounts, despite concerns that companies are yet to see meaningful returns on their investments. Microsoft’s capital expenditures nearly doubled from the same period last year to $20 billion in its most recent quarterly report, while Meta (META)’s expenditures rose 36% to $9.2 billion over the same period. Google’s capital expenditures rose 63% to $13 billion. At the same time, only 4% of US workers actually use AI on a daily basis, according to a recent Gallup poll cited by Bloomberg.
