This earnings season has delivered plenty of good news for the artificial intelligence trade, but instead of bidding up Nvidia Corp. shares, investors have been dumping them.
Nvidia, whose graphics processing units, or GPUs, dominate the market for AI chips, has fallen 7% since closing at a record high on April 27. Over that span, the stock is one of the worst performers in the Philadelphia semiconductor index, which is up about 9%.
The reason is that even as tech giants keep pledging to spend more on computing gear, Nvidia’s grip on the AI processor market is seen as increasingly under threat from other chipmakers as well as its biggest customers.
Nvidia rose as much as 2.6% in early trading Wednesday.
“I wouldn’t say that Nvidia’s competitive positioning is materially threatened by these new chips, but the market action in Nvidia reflects how people are starting to question its market share, its competitive moat, and its margins,” said Clayton Allison, portfolio manager at Prime Capital Financial, which has about $40 billion in assets.
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