Nvidia stock slides amid concerns about slowing AI spending and increasing competition

nvidia stock (NVDA) fell 1.2% on Tuesday, continuing its downward spiral as investors grew increasingly wary that spending on artificial intelligence that fueled its surge could decline or spread to competitors.

Shares of the artificial intelligence chip maker are down nearly 12% from their record 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 leading supplier of AI chips, as major tech companies turn to all things generative AI. In 2024, it swaps places with Apple (Apple) as the world’s most valuable company, and in early November, it replaced the once-dominant Intel (Intech(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 in 2025.

But after its record close in November, Nvidia shares began to decline after Microsoft’s suspension (MSFT) And Google (Google) indicated that their spending on AI will grow at a slower pace in the future. Rumors about Blackwell AI’s latest servers overheating have raised fears of further delays in ramping up production. Sending the stock down even more. Even the latest Nvidia products Explosion earnings reportwhich exceeded Analysts’ bullish expectations are already highDidn’t do much to help the arrow’s trajectory.

Adding to Nvidia’s problems, the Chinese Competition Authority said last week that it had done so Launched an antitrust investigation In Nvidia’s acquisition of networking technology company Mellanox for $7 billion.

Meanwhile, competition is heating up. Amazon (Amzn) In early December, it said it was building a supercomputer with its new servers and its Trainium AI chips — which It will hopefully become a viable alternative to Nvidia. Broadcom (Afgo) in its latest earnings report deals with super expanders to supply Custom AI chips called XPUs will fetch up to $90 billion over the next three years – sending Nvidia and its shares rising in the opposite direction, despite analyst comments that… Broadcom’s success will not come at the expense of Nvidia.

Also on Tuesday, the PHLX Semiconductor Index rose (^ Soxwhich includes shares of Nvidia and other chipmakers, fell 1.6%.

Big tech companies’ AI bills continue to skyrocket despite concerns Companies have not yet seen a tangible return on their investments. Microsoft’s capital expenditures nearly doubled compared to the same period last year, reaching $20 billion in its latest quarterly report, while Meta’sdead) Expenditures rose 36% to $9.2 billion during the same period. Google’s capital expenditures jumped 63% to $13 billion. Meanwhile, only 4% of U.S. workers use AI daily, according to A recent Gallup poll cited by Bloomberg.

The story continues