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Nvidia Faces New AI Chip Competition from Huawei:
Nvidia's stock price dropped by 2% on Monday, even as the S&P 500 went up by 0.2%. This happened because a Chinese company, Huawei Technologies, is reportedly getting ready to challenge Nvidia in the market for artificial intelligence (AI) chips.
According to The Wall Street Journal, Huawei has approached some Chinese tech companies to test its new chip called the Ascend 910D. Huawei hopes this new chip will be more powerful than Nvidia's H100 chip, which came out in 2022 and has since been followed by newer Nvidia chips like the Hopper series and the Blackwell AI semiconductors.
Currently, Nvidia is not allowed to sell its most advanced AI chips to companies in China. However, Huawei is already set to ship over 800,000 of its Ascend 910B and 910C chips to customers in China, including big state-owned phone companies and private AI developers like ByteDance, the owner of TikTok.
Nvidia's sales in China were already expected to decrease after the Trump administration announced new license requirements for future sales of its H20 AI accelerators, which were specifically designed to meet U.S. rules on AI exports to China. In fiscal year 2025, only 13% of Nvidia's sales came from billing addresses in China, a drop from 26% in fiscal year 2022.
Outside of China, it's believed that the competition from Huawei might not be as significant because Huawei is still behind Nvidia's latest technology. An independent analyst, Richard Windsor, noted that the main threat to Nvidia is in China, where government control might push companies to move away from Nvidia's software (CUDA) and instead learn to use Huawei's development platforms.
On a positive note for Nvidia, one of its major U.S. customers, Elon Musk's AI startup called xAI, is reportedly looking to raise $20 billion in funding. If this funding happens, a large portion of that money could be used to buy Nvidia's hardware, as xAI has already invested in hundreds of thousands of Nvidia's chips for its AI data centers.
Nvidia also announced on Monday that the first liquid-cooled GB200 NVL72 racks from Oracle, a software and cloud computing company, are now ready for customers. These racks contain many of Nvidia's chips working together.
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Is the AI fever in the US stock market about to ebb? The financial reports of Nvidia (NVDA.US) and Salesforce (CRM.US) make investors "half-hearted"
After the recent violent fluctuations in U.S. stocks, investors have been expecting Nvidia's (NVDA.US) financial report to inject new vitality into the AI sector, but the actual situation has failed to do so. The chip manufacturing giant's performance failed to arouse market enthusiasm. Although its earnings exceeded expectations, it was not as stunning as in the past, and its outlook for the next quarter was mixed. While Nvidia has eased some of the pressure on its stock price since the rise of AI startup DeepSeek earlier this year, major questions about whether AI investment can be sustained remain unresolved. After the earnings report was released, Nvidia shares rose only slightly by about 1% in premarket trading on Thursday. "A few months ago, we were pretty sure about the growth prospects of AI," said Brian Mulberry, client portfolio manager at Zacks Investment Management. "Today, market expectations have become more fragmented, and the volatility of related AI stocks is beginning to reflect this." The outlook for AI services is more uncertain. Salesforce (CRM.US), which began launching so-called AI agents last year, fell more than 3% before the market after giving a disappointing performance outlook. The company said that "Agentforce", which aims to complete tasks such as customer service without manual guidance, is expected to make a limited contribution to revenue this year. "Salesforce appears to be having some difficulties," said Chris Brigati, chief investment officer at SWBC. The earnings reports of Nvidia and SAFTSE seem that "the AI boom may not be as strong as it will be in 2023 or 2024, although the overall trend remains positive and there is some room for growth." However, Brigati is still bullish on Nvidia's market leadership in AI, saying that any pullback in the stock could be a buying opportunity. These earnings come at a delicate time in the AI space. The rise of DeepSeek, a lower-cost AI model, not only poses a challenge to the dominance of the United States in this emerging field, but also raises questions about the huge AI spending of enterprises. At the same time, the technology industry has also been hit by uncertainty about the impact of President Trump's tariff policies on the U.S. economy and inflation. A "Big Seven" index tracking Nvidia is down 11% from its peak in December last year. The tech-heavy Nasdaq 100 is also down nearly 5% from last week's record close. Shares of Nvidia and other hardware makers remain clouded even as tech giants such as Meta Platforms (META.US) and Amazon (AMZN.US) reiterate that they will continue to ramp up capital spending plans this year. Krishna Chintalapalli, portfolio manager at Parnassus Investments, said Nvidia's solid performance will delay some of the major issues surrounding the AI boom by three to six months. "But the long-standing debate has not been resolved," he said. "Issues remain about the sustainability of spending, the monetization of large language models (LLMs), enterprise adoption rates. While these are advancing, we are still in the early stages." The initial gains from the AI boom have
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