TLDR
- Nvidia stock rose 0.8% in premarket trading despite recent monthly decline of 8%
- Citi analyst Atif Malik reduced price target from $210 to $200 while keeping buy rating
- Broadcom disclosed $10 billion order for custom AI accelerators, pressuring Nvidia’s dominance
- KeyBanc analyst maintains overweight rating with $230 target, citing CUDA software advantages
- Nvidia participated in €1.7 billion funding round for Mistral AI valued at $13.8 billion
Nvidia shares climbed 0.8% to $169.65 in premarket trading Tuesday, shaking off competition worries that have weighed on the AI chip giant. The stock has dropped 8% over the past month despite Monday’s modest gain.
The chipmaker faces fresh pressure from rivals pushing custom processors. Broadcom recently reported strong quarterly results and disclosed a $10 billion order for its XPUs, next-generation custom accelerators that could eat into Nvidia’s market share.
Citi analyst Atif Malik responded by trimming his Nvidia price target to $200 from $210 while keeping a buy rating. He sees the custom chip market accelerating as tech giants develop their own processors.
Malik projects the XPU segment will grow 53% in 2026, outpacing the 34% growth expected for AI GPUs. This shift is driven by ramp-ups at Google, Meta, and Amazon as they reduce reliance on Nvidia’s hardware.
Market Share Under Pressure
Citi now estimates about $12 billion less in GPU sales for 2026 than previously modeled. This includes a $2 billion reduction from Meta alone.
The revised forecast implies roughly a 5% hit to the prior $232 billion prediction for 2026 merchant GPU sales. Nvidia currently holds about 90% market share in AI processors.
Despite the competition threat, Wall Street analysts remain largely supportive. KeyBanc analyst John Vinh kept an overweight rating and $230 price target on Monday.
Vinh highlighted Nvidia’s key advantage in its CUDA software stack. Developers are familiar with this platform, creating barriers that could reduce customer switching to competitors like Google’s Tensor Processing Units.
Recent Financial Performance
Nvidia’s Q2 data center revenue missed estimates for the second consecutive quarter. This disappointment has contributed to the stock’s recent underperformance.
The company posted Q2 earnings of $1.05 per share, beating Wall Street estimates of $1.01. Revenue rose 56% to $46.74 billion, higher than the $46.06 billion analyst forecast.
CEO Jensen Huang emphasized strong demand for Blackwell, Nvidia’s key graphics processing unit architecture. “Production of Blackwell Ultra is ramping at full speed, and demand is extraordinary,” Huang said in August.
Nvidia also made a strategic investment Tuesday, participating in a €1.7 billion funding round for French AI startup Mistral AI. The deal values Mistral at about $13.8 billion.
The funding round was led by chipmaking equipment company ASML Holding. This investment shows Nvidia’s continued push into the broader AI ecosystem beyond just hardware sales.
Advanced Micro Devices gained 0.3% in premarket trading while Broadcom climbed 1.2%. The broader semiconductor sector showed mixed movement as investors weighed competition dynamics.
Malik noted that Citi’s estimates don’t include China sales, which could provide upside if Nvidia restarts GPU shipments there. The company struck a deal with the U.S. government in August to resume Chinese sales for a 15% fee.
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