Nvidia (NVDA) stock is facing further declines on November 25th after reports surfaced that Meta Platforms (META) is considering a switch to Google’s (GOOGL) tensor processing units (TPUs) for its AI data centers. META has traditionally relied heavily on NVDA chips to power its artificial intelligence infrastructure but is now exploring a shift to GOOGL by early 2027.
The news has caused Nvidia shares to drop by about 18% from their year-to-date peak in late October. Meta Platforms’ potential move to Google’s custom chips highlights the increasing competition in the AI hardware space. Nvidia has long been the dominant supplier of GPUs for large-scale AI training, but losing Meta’s business by 2027 could have a significant impact on its revenue growth.
There are concerns that other tech giants like Microsoft (MSFT) could also follow suit in diversifying their chip suppliers, posing a threat to Nvidia’s market share and pricing power. A structural shift away from Nvidia’s chips could make it challenging for NVDA stock to maintain its strong performance in the future.
Despite the negative news, former hedge fund manager Jim Cramer remains bullish on Nvidia stock. He recommends long-term investors to either initiate or increase their positions in the company, citing strong fundamentals and a massive $500 billion worth of demand. Cramer believes that Nvidia’s Blackwell chips and next-gen Vera Rubin platform will drive NVDA shares to record levels by 2026.
TD Cowen analysts have also reiterated their “Buy” rating on Nvidia stock with a price target of $235, indicating nearly 40% upside potential from current levels. Other Wall Street firms are also advising investors to hold onto NVDA stock for the next 12 months.
In summary, while Nvidia faces challenges from potential competition and supply chain diversification, there is still optimism about the company’s long-term growth prospects. Investors are advised to carefully monitor developments in the AI hardware industry and consider the potential opportunities and risks associated with owning Nvidia stock.
