TLDR
- Nvidia announces £2 billion investment in UK AI start-ups as part of broader tech investment wave during Trump’s UK visit
- Company pledges additional £11 billion for UK AI factories by 2026, partnering with CoreWeave, Microsoft and Nscale
- Nvidia stock has underperformed rivals since October 2024, gaining just 28% compared to other AI stocks’ 60%+ returns
- GPU rental prices have dropped from $3 to $2 per hour, raising questions about Nvidia’s pricing power
- Wall Street analysts maintain “Strong Buy” rating with average price target of $211.69, representing 20% upside
Nvidia announced a £2 billion investment in UK artificial intelligence start-ups this week. The pledge came during US President Donald Trump’s state visit to Britain.
The investment forms part of a larger £13 billion commitment to the UK. Nvidia plans to spend £11 billion building AI factories by the end of 2026.
The company will partner with CoreWeave, Microsoft and Nscale on the factory initiative. The remaining £2 billion targets the start-up ecosystem directly.
CEO Jensen Huang attended events alongside Trump and other Silicon Valley executives. The announcements helped secure £150 billion in total UK tech investments during the visit.
Nvidia identified several challenges facing UK AI companies. These include limited supercomputing access and constrained venture capital outside London.
The investment will target hubs in London, Oxford, Cambridge and Manchester. Nvidia is partnering with venture capital firms including Accel and Balderton.
Stock Performance Concerns
Despite the investment news, Nvidia stock faces performance questions. Shares have gained just 28% since October 2024.
Other AI-related stocks have performed much better over the same period. Taiwan Semiconductor, Micron and Seagate have risen more than twice as much.
Energy and infrastructure stocks supporting AI data centers have gained over 60%. This outperformance has surprised some investors given Nvidia’s market position.
The stock rose over 3% on Thursday following the UK investment announcement. However, longer-term momentum has slowed compared to the initial AI boom.
Political factors may be weighing on sentiment. The Trump administration requires Nvidia to hand over 15% of China AI chip sales to the US government.
Chinese companies also face increased restrictions on buying Nvidia products. These headlines could affect investor confidence in growth prospects.
Pricing Power Questions
GPU rental prices have dropped from nearly $3 per hour to around $2. This decline affects data centers renting Nvidia’s top-end chips.
The company’s new Blackwell line offers improved efficiency. However, better efficiency naturally leads to lower rental costs.
Some analysts question whether this signals weakening demand. A cooling rental market suggests buyers are becoming more selective about computing power purchases.
Nvidia’s grip on pricing power may be slipping as the market matures. The GPU market remains strong but growth rates appear to be leveling out.
Wall Street analysts maintain confidence in the stock despite recent underperformance. Out of 38 analysts, 35 recommend buying Nvidia shares.
Only one analyst rates the stock as a sell. The consensus price target sits at $211.69, representing 20% upside from current levels.
Bespoke Investment Group described the recent weakness as a “narrative test.” They believe it could set up conditions for the next rally phase.
Nvidia stock closed Thursday with gains following the UK investment announcement and partnership news with Intel.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
