Nvidia, a key player in the artificial intelligence sector, experienced a significant drop in its stock price on Tuesday, continuing a series of declines that have plagued the company since the beginning of the month. This downturn stands in stark contrast to the upward momentum seen in major market indices, such as the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average.
On Tuesday, Nvidia’s shares ended the day down 2.6%, and further declined by half a percent to $177.68 in after-hours trading. This decline comes on the heels of a report from The Information indicating that Meta is contemplating a multibillion-dollar investment in Google’s AI chips.
According to the reported information, Meta is reportedly in discussions with Google regarding the utilization of Alphabet’s processing units for AI applications within its data centers by 2027. This development poses a potential threat to Nvidia, as it is suggested that Google’s AI chip business, designed for high-frequency trading operations utilizing AI models, could capture up to 10% of Nvidia’s annual revenue.
In contrast to Nvidia’s struggles, shares of Alphabet rose by 1.6% on Tuesday, marking a robust month for the tech giant’s stock which has seen an increase of 24.2% since early November. Meanwhile, the broader market exhibited positive trends, with the Dow Jones climbing over 1%, the Nasdaq composite gaining 0.7%, and the S&P 500 rising by 0.9%. This momentum reflects a three-day rally that has reassured investors amidst ongoing market fluctuations.
The report also suggested that Nvidia’s CEO, Jensen Huang, might seek to preempt any potential partnership between Meta and Google by forging an agreement with Meta himself, given that the latter currently invests billions in Nvidia’s chips. Additionally, Google is rapidly advancing in its development of AI inference chips, which analyze and make decisions based on unfamiliar data, contrasting with chips tailored for AI training that require predefined datasets.
As the competition in the AI tech landscape intensifies, all eyes remain on developments surrounding Nvidia, Meta, and Google, which could significantly reshape the industry in the coming years.
