Nvidia Corp (NASDAQ:NVDA, XETRA:NVD) shares fell 4.5% on Tuesday amid investor worries over rising competition in the artificial intelligence (AI) chip market.
Investors are weighing reports that Meta Platforms Inc (NASDAQ:META, XETRA:FB2A, SIX:FB) is considering using Google’s AI chips instead of Nvidia’s, raising concerns about potential market share shifts in the fast-growing AI sector.
A Nvidia spokesperson pushed back against worries over its competitive position, saying on X: “We’re delighted by Google’s success — they’ve made great advances in AI and we continue to supply to Google.
"NVIDIA is a generation ahead of the industry — it’s the only platform that runs every AI model and does it everywhere computing is done. NVIDIA offers greater performance, versatility, and fungibility than ASICs, which are designed for specific AI frameworks or functions.”
Despite the selloff, Nvidia remains the dominant player in AI compute, controlling up to 90% of the global market. Industry analysts note that overall demand for AI chips is growing 50–70% year-on-year, far outstripping supply, suggesting that Nvidia is unlikely to lose its leadership in the near term.
“Nvidia’s dominant position is unlikely to be fundamentally threatened in the short term, but markets are all about forward expectations,” Chris Beauchamp, Chief Market Analyst at IG said Tuesday.
“(It) certainly seems like Alphabet is poised to snatch market share away from Jensen Huang’s empire.”
The decline in Nvidia weighed on the Nasdaq, which fell even as the Dow Jones, small-cap stocks, and European markets posted gains.
“Such rotation in market leadership is ultimately healthy, but can lead to some tricky moves underneath the surface,” Beauchamp added.
--Updated with Nvidia comment--