NVIDIA’s (NVDA) shares fell by 4.18% to 136.02 USD on Monday, despite major stock market indices showing increases (S&P 500 rose by 0.30%, and Dow Jones by 0.99%). This marked the second consecutive day of decline for NVIDIA, with its share price remaining 16.87 USD below the 52-week high. The volume of trading stood at 326.5 million shares, significantly exceeding the 50-day average of 246.7 million.
Dell Technologies is preparing its quarterly report, expected to shed light on trends related to demand for AI solutions. The anticipated company revenue for the third quarter is 24.7 billion USD, with earnings per share (EPS) expected to reach 2.07 USD. Fourth quarter forecasts are even higher, with expected revenues of 25.5 billion USD and an EPS of 2.64 USD. Despite a slight drop in share price to 144.30 USD on Monday, Dell remains one of the best performing players in the market, with an 88 percent increase in value since the beginning of the year. Morgan Stanley has maintained its “Overweight” recommendation with a target price of 154 USD, indicating long-term growth potential in the AI server market.
Dell has begun shipping advanced server systems based on the NVIDIA Blackwell GB200 NVL72 devices, significantly reducing the cost of training AI models and increasing their efficiency. However, this has raised questions about the scalability of AI models. Experts note that the benefits begin to diminish when models exceed a trillion parameters, mainly due to limited availability of appropriate training data. In response to these challenges, there is growing interest in alternative strategies such as inference – the process of generating results by trained models. Inference is seen as a more economical solution compared to traditional training, opening up new opportunities for NVIDIA competitors like AMD, Intel, and Amazon. NVIDIA already generates 40% of its data center revenue from inference, mainly due to the efficiency of its NVL72 devices.
Amazon is also actively working in the AI chip market, developing its proprietary chips, such as Trainium2, intended to compete with NVIDIA solutions. The new generation of Amazon chips, according to the company, offers a 30% better performance-to-price ratio than competitive devices. Trainium2 is part of Amazon’s long-term strategy, which includes reducing dependence on external suppliers and optimizing operational costs of its data centers. Amazon has already begun implementing Trainium2 in some data centers and plans further investment in the development of its own chips, positioning itself as a serious competitor to NVIDIA in the long term.
Geopolitics also plays a key role in NVIDIA’s operations. Monday’s stock decline was partly due to reports of company representatives meeting with Chinese officials, underscoring the importance of this market in the context of global political tensions. At the same time, Apple CEO Tim Cook attended a supply chain conference in China, demonstrating how crucial this market is for tech leaders.
Though NVIDIA remains a dominant player in the AI sector, increasing competition and new approaches such as inference, along with Amazon’s initiatives in developing its own AI chips, are changing the market landscape. Dell, Amazon, and other companies are vying for a share in this rapidly evolving segment by offering new products and investing in innovations. Simultaneously, investor expectations and geopolitical tensions present growing challenges for both NVIDIA and other global tech giants.
Author: Krzysztof Kamiński – Oanda TMS Brokers
Source: https://ceo.com.pl/kurs-akcji-nvidia-spadl-o-418-rosnaca-konkurencja-i-napiecia-geopolityczne-zmieniaja-krajobraz-rynku-ai-29493
