TLDR:
- Nvidia stock fell 1.7% in premarket trading as investors await Meta and Microsoft earnings
- Super Micro Computer warned of “delayed customer platform decisions,” possibly related to Nvidia’s transition from Hopper to Blackwell chips
- Huawei is preparing to launch a powerful AI processor that could compete with Nvidia
- Veteran analyst Stephen Guilfoyle has exited his Nvidia position due to industry pressure
- Major tech companies are considering diversifying chip suppliers or manufacturing their own chips
Nvidia investors are closely watching Meta and Microsoft’s earnings reports today, particularly their capital expenditure plans for AI data centers. Nvidia shares dropped 1.7% in premarket trading Wednesday, following a 0.3% gain in Tuesday’s session.
The chip giant faces pressure from multiple directions. Super Micro Computer, which often uses Nvidia chips in its servers, warned that its quarterly results would fall short of expectations.
Super Micro cited “delayed customer platform decisions” as the reason. This suggests customers might be waiting for Nvidia’s new Blackwell processors rather than purchasing systems with the older Hopper hardware.
While Super Micro’s stock plunged on this news, the impact on Nvidia could be limited. If Nvidia can successfully ramp up Blackwell sales to meet demand, the transition delay might be temporary.
Other chip stocks were also down in premarket trading. Advanced Micro Devices fell 0.7% and Broadcom dropped 0.6%.
Competition Heats Up from China
Adding to Nvidia’s challenges, Huawei is preparing to launch its newest and most powerful artificial-intelligence processor. The Chinese tech giant appears to be directly targeting Nvidia’s market position.
This development comes as Nvidia faces restrictions on selling its advanced chips to Chinese customers. Huawei is positioning itself to fill this gap in the Chinese market.
Veteran analyst Stephen Guilfoyle recently shared his decision to exit his long-held positions in both Nvidia and AMD. His move wasn’t due to lack of faith in Nvidia CEO Jensen Huang or AMD CEO Lisa Su, but rather his assessment of current market conditions.
“I got out of both of those names. I had whittled down those positions as they eroded,” Guilfoyle explained.
Pricing Pressure Builds
Guilfoyle pointed to increasing pressure on hyperscalers in the U.S. market. These large tech companies are either diversifying their chip suppliers or developing their own chips, like Apple and Amazon have done.
This trend reduces Nvidia’s pricing power. “I don’t think they have pricing power the way they once did,” Guilfoyle noted.
Amazon CEO Andy Jassy recently confirmed this shift in his letter to shareholders. While the AI market continues to grow, Amazon is now making many of its own chips, changing the dynamics of the semiconductor market.
The capital expenditure forecasts from Meta and Microsoft will be crucial indicators for Nvidia’s near-term outlook. These tech giants’ continued investment in AI data centers would support demand for Nvidia’s processors.
However, the long-term picture is more complex. As more companies develop in-house chip capabilities and competitors like Huawei enter the market, Nvidia may face a changing competitive landscape.
For now, investors are weighing these factors as they assess Nvidia’s position in the evolving AI chip market. The company’s ability to execute its Blackwell rollout and maintain its technological edge will be key factors in the coming months.
The most recent data shows Nvidia trading at $107.20 in premarket activity, down from Tuesday’s close of $109.05.
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