This earnings season has delivered plenty of good news for the artificial intelligence trade, but instead of bidding up Nvidia Corp. shares, investors have been dumping them. Nvidia, whose graphics processing units (GPUs) dominate the market for AI chips, has fallen seven percent since closing at a record high on April 27. Over that span, the stock is one of the worst performers in the Philadelphia semiconductor index, which is up about nine percent.
The reason is that even as tech giants keep pledging to spend more on computing gear, Nvidia's grip on the AI processor market is seen as increasingly under threat from other chipmakers as well as its biggest customers.
Competition Intensifies
On Tuesday, the publication the Information reported that Anthropic PBC, which is already a major customer of Google's chips, is planning to spend about US$200 billion with Alphabet Inc.-owned company over the next five years. That comes a week after Alphabet said it would start offering its tensor processing unit (TPU) chips to select customers for use in their own data centres.
Amazon.com Inc., meanwhile, said its Trainium line of custom AI chips have more than US$225 billion in revenue commitments and it recently announced a multibillion-dollar pledge from Meta, which is itself preparing to deploy homegrown AI chips. Intel Corp. is benefiting from AI growth, and Qualcomm Inc. is also making headway in the data centre market.
Market Share Concerns
There is little evidence so far to suggest that Nvidia is losing significant ground to rivals. The company's share of the AI accelerator market was 86 percent in 2025, unchanged from 2024, according to data compiled by Bloomberg Intelligence. But the threat is raising doubts about the outlook for its long-term growth and making other stocks look relatively more attractive.
“The problem with having basically 100 percent market share is that there's only one direction for it to go, and it certainly seems like these companies could be credible competitors,” said Bill Stone, chief investment officer at Glenview Trust Company.
Stock Performance
Nvidia shares are up 7.8 percent this year, roughly in line with the S&P 500, but the gain pales in comparison to other chip-related companies. The Philadelphia semiconductor index has jumped 60 percent, leaving Nvidia as one of the worst performers among the benchmark's 30 constituents in 2026.
“If we start to get the sense that Nvidia is losing marginal business, that rivals are chipping away at its market share or pricing power, then that could start to erode its earnings momentum and we could see the stock fall off as a result,” said Stone, who helps oversee US$18 billion in assets.
Nvidia rose as much as 2.6 percent in early trading Wednesday. A representative for Nvidia declined to comment, citing a quiet period.
Insatiable demand for AI computing gear fueled Nvidia's rise to become the world's most valuable company with a market value of US$4.8 trillion. But it is close to being overtaken by Alphabet, which has seen its market value soar by more than US$2.5 trillion over the past year amid excitement about its AI services, including its popular Gemini chatbot, as well as cloud computing and chip businesses. Alphabet closed on Tuesday with a market value of about US$4.7 trillion.
