Nvidia slips 0.18% despite China AI push and strong demand outlook

Nvidia's stock edged lower even as the chipmaker deepened its China AI partnerships and reported growing demand for its next-generation processors.

Nvidia Corp. shares slipped 0.18% on Friday, a marginal decline that belied a week of expanding AI partnerships in China and surging demand for the company's next-generation Blackwell processors.

"The China push is strategically important, but the market is focused on whether Nvidia can sustain its 90% plus share of the AI training market as competitors like AMD and homegrown Chinese chips gain traction," said Stacy Rasgon, analyst at Bernstein.

Nvidia has been deepening ties with Chinese technology firms through new product initiatives tailored to comply with US export restrictions while still delivering competitive AI performance. The company's next-generation Blackwell architecture, built on TSMC's 4nm process node (which packs more transistors per square millimeter for improved performance per watt), has seen order volumes exceed initial expectations, according to supply chain checks.

The modest pullback comes as Nvidia has already erased roughly $260 billion in market value this month as part of a broader sell-off in megacap technology stocks. The "Magnificent Seven" group — including Microsoft, Amazon, Apple, Alphabet, Nvidia, Tesla and Meta — has lost about $2 trillion in combined market capitalization in June alone, according to Yahoo Finance analysis.

Nvidia's China strategy has become a critical balancing act. The company has developed modified versions of its high-end chips that comply with US export controls while still offering meaningful AI training capability. These tailored products are finding buyers among Chinese cloud providers and AI startups that cannot access the full-power versions available in other markets.

The broader semiconductor sector showed mixed signals this week. Intel Corp. jumped as much as 10% on Thursday after Bank of America analyst Vivek Arya upgraded the stock to Buy from Underperform, citing higher confidence in Intel's opportunity to help address industry constraints in leading-edge wafers and packaging. The iShares Semiconductor ETF gained 4% on the same day, suggesting sector-wide momentum that Nvidia failed to capture.

Nvidia's dominance in AI chips faces growing competitive pressure. Advanced Micro Devices has been gaining share in the inference segment with its MI300 series, while a wave of custom chip designs from cloud hyperscalers — including Amazon's Trainium and Google's TPU — threatens to erode Nvidia's pricing power over time. Chinese firms including Huawei have also accelerated development of domestic AI accelerators, though they remain multiple generations behind on process technology.

Nvidia shares trade at roughly 35 times forward earnings, a premium to the broader semiconductor sector's 16.9 times multiple that reflects its dominant AI positioning. The risk is that any sign of market share erosion — whether from AMD, custom chips or Chinese competitors — could compress that valuation premium. For now, the Blackwell ramp and China pivot provide near-term demand visibility, but the stock's June decline suggests investors are already pricing in a more competitive 2027.

This article is for informational purposes only and does not constitute investment advice.