Nvidia Stock Struggles Amid Rising Competition and Headwinds
Nvidia stock has been struggling to retest its all-time high as the company faces significant headwinds. Jensen Huang's Nvidia is contending with calls for AI development slowdown, which would affect its business. President Donald Trump and Huang have insisted that the AI industry needs to continue growing to give the US a lead against China.
Concerns about the data center industry are also leading to project delays or cancellations. For example, Oracle's (ORCL) Project Jupiter is facing delays due to environmental concerns in New Mexico. Additionally, OpenAI has developed its Jalapeno chip in collaboration with Broadcom (AVGO), which beats Nvidia's chips in some metrics.
Big-tech companies like Microsoft (MSFT), Meta Platforms (MSFT), and Amazon (AMZN) are building their own chips, accounting for about 50% of Nvidia's revenue. Smaller companies such as SambaNova, Euclyd, and Etched have received millions in investments to challenge Nvidia. Nvidia stock is also struggling as some companies it has invested in retreat.
On the positive side, Nvidia's growth continues despite these challenges. Its latest results showed that second-quarter revenue more than doubled, and management expects revenue to grow by over 77% in the next financial year. The company may benefit from an upcoming Trump-Xi meeting in Washington, which could lead to a deal for selling its most advanced chips to China.