Nvidia Shares Decline Amid New Competition from Huawei

Shares of Nvidia (NASDAQ: NVDA) are experiencing a pullback as investors react to emerging challenges for the AI leader. Just weeks after announcing a potential $5.5 billion write-off related to export regulations on its H20 chips intended for China, Nvidia now faces new competition from Chinese tech giant Huawei.

As a result, Nvidia stock was down 2.6% as of 3:21 p.m. ET.

Image source: Getty Images.

Emerging Threat from Huawei

The technology competition between the U.S. and China intensifies as The Wall Street Journal reported that Huawei is preparing to test its new AI chip, the Ascend 910D. This chip is expected to outperform Nvidia’s H100, a leading graphics processing unit (GPU) integral to the AI revolution.

According to the report, Huawei plans to distribute over 800,000 of these new chips to clients, including state-owned telecom companies and ByteDance, the parent company of TikTok.

Assessing Nvidia’s Risks

The ongoing U.S.-China tensions have led to export restrictions, as the U.S. government seeks to limit the use of Chinese technology, including apps like TikTok and DeepSeek.

These geopolitical dynamics may confine the reach of Huawei’s AI chip to the Chinese market. Nvidia is also losing ground in China following new restrictions imposed during the Trump administration. Therefore, while Huawei poses a potential threat, it is less significant considering Nvidia’s diminishing business in that region. Observations suggest that a substantial portion of Nvidia’s revenue might come from its chips being smuggled into China.

It is important to note that Nvidia is actively enhancing its technology. With a price-to-earnings ratio of 37, the stock appears reasonably valued, suggesting that recent dips offer a good long-term investment opportunity.

Investment Considerations

Investors often feel they’ve missed chances to acquire high-performing stocks. However, Nvidia remains a contender worth monitoring.

In unique circumstances, analysts may issue a “Double Down” recommendation for stocks poised for growth. Historical performance shows substantial returns for Nvidia and other tech giants over time:

• Nvidia: An investment of $1,000 in 2009 would have grown to $287,877!
• Apple: A $1,000 investment in 2008 would now be worth $39,678!
• Netflix: A $1,000 investment in 2004 would have increased to $594,046!

Now, three companies are being highlighted with “Double Down” alerts, providing another potential investment opportunity.

Jeremy Bowman has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool follows a disclosure policy.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.