Nvidia wraps tough week as investors focus on competition over growth

Nvidia It reported big earnings on Wednesday and issued a better-than-expected forecast showing growth accelerating. CEO Jensen Huang declared that “computing demand is growing rapidly.”

Investors’ concerns appear to lie elsewhere.

The stock fell for a second straight day on Friday, losing nearly 7% for the week in its steepest decline since November. With the withdrawal, Nvidia’s shares also fell throughout the year, joining other major technology companies.

One of the most common concerns in the market is that capital spending among the tech giants will soon peak, meaning Nvidia’s growth rates are poised to slow significantly in the coming quarters and years. Another problem for investors is competition; Companies that are purchasing large quantities of chips for artificial intelligence have begun to show more interest in alternatives to Nvidia’s graphics processing units (GPUs).

OpenAI, which has relied heavily on Nvidia GPUs to train and run AI models for years, said Friday that it will consume 2 gigawatts worth of energy. Amazon Web Services’ Trainium AI chip capability. This announcement comes as OpenAI closed a $110 billion funding round; Amazon contributed $50 billion and Nvidia contributed $30 billion.

“This is the biggest validation of Amazon’s custom AI silicon strategy to date, giving OpenAI real protection against Nvidia supply constraints and pricing power,” wrote Patrick Moorhead, CEO of Moor Insights and Strategy. to post In X.

Last month, OpenAI committed to buying 750 megawatts of computing power from smaller AI chip maker Cerebras.

OpenAI still uses a lot of Nvidia. Nvidia will use 5 gigawatts of computing power in its next-generation Vera Rubin GPUs, the company said Friday. This is above current Nvidia GPUs. CoreWeave, Microsoft And Seer clouds

Nvidia on Wednesday said revenue rose 73% year over year to $68 billion in the January quarter and called for 77% growth in the current quarter; This will be the fastest growth rate in a year. However, after the expected growth rate of 65 percent this fiscal year, analysts predict that this figure will fall to 30 percent, 13 percent and 14 percent respectively in the next three years.

Meta is also exploring Nvidia alternatives. on tuesday Advanced Micro Devices The social media company said its Instinct GPUs will consume up to 6 gigawatts. And on Thursday, Information Meta reportedly made a multibillion-dollar deal Google’s Tensor Processing Units.

broadcomThe company, which makes custom chips for Google, was down nearly 4% for the week. The company is scheduled to announce first-quarter financial results on Wednesday.

With this week’s decline, Nvidia lost 5% on a yearly basis; This decline is seen as a buying opportunity by some analysts.

“We don’t know when investors will view these AI names more favorably, but the stock continues to get cheaper and we believe there will be a turnaround at some point,” Jefferies analysts, who recommend buying the shares, wrote in a note Wednesday. he said.

— CNBC’s Katie Tarasov and Ari Levy contributed to this report.

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