- Nvidia shares drop nearly 4% amid rising AI chip competition.
- AMD partners with Oracle on new AI “supercluster” powered by MI450 chips.
- Broader US markets fall as China imposes sanctions on US subsidiaries.
Nvidia stock fell sharply on Tuesday as investors weighed fresh competitive threats in the artificial intelligence chip market and broader weakness across US equities.
The Nvidia stock was down 3.9% at $180.99 in early trading, giving back part of Monday’s 2.8% gain.
The decline came amid renewed trade tensions between Washington and Beijing that dragged down the broader market.
The Dow Jones Industrial Average fell 416 points, or 0.9%, while the S&P 500 slipped 1.1% and the Nasdaq Composite dropped 1.6%.
The losses erased gains from the previous session.
China announced sanctions on five US subsidiaries of South Korea’s Hanwha Ocean, barring Chinese entities and individuals from doing business with them.
The move reignited investor concerns about the fragile US-China trade relationship and its potential impact on technology supply chains.
AMD and Oracle announce partnership
Nvidia’s drop also followed an announcement by Oracle and Advanced Micro Devices (AMD), which said Tuesday that Oracle would launch the first publicly available AI “supercluster” powered by AMD’s next-generation Instinct MI450 processors.
The deployment of 50,000 chips is expected to begin in the third quarter of 2026.
The MI400 series, which includes the MI450 chip, will be AMD’s first rack-scale, 72-processor AI server offering — a step that could make the company a stronger competitor to Nvidia’s dominant GPU lineup.
At current levels, Nvidia remains the clear market leader in AI chips, but rising competition from AMD and renewed geopolitical uncertainty have introduced new headwinds for investors to monitor.
AMD shares were up 0.2% in early trading following the announcement.
Among other semiconductor stocks, Broadcom dropped 4.2% after gaining nearly 10% on Monday when it announced a partnership with OpenAI to develop and deploy 10 gigawatts of custom AI accelerators.
Analysts maintain optimism on Nvidia stock
Despite Tuesday’s pullback, analysts remain positive on Nvidia’s long-term prospects.
Piper Sandler reiterated its Overweight rating and $225 price target, citing continued robust demand and tight supply across Nvidia’s product lines.
The firm noted that Nvidia’s financing relationships with key customers such as OpenAI and CoreWeave remain stable, insulated from the “circular financing” issues affecting other technology players.
However, Piper Sandler also acknowledged that Nvidia’s business in China remains constrained due to government pressure on local customers.
The firm noted that while some export licenses have been granted, operations in the region continue to face limits.
Cantor Fitzgerald raised its price target for Nvidia to $300 from $240 last week, maintaining an Overweight rating following meetings with the company’s management.
The brokerage said the ongoing buildout of AI infrastructure remains in its early stages, with hyperscalers demonstrating strong, long-term demand visibility potentially worth hundreds of billions of dollars over the next several years.
Cantor Fitzgerald expressed growing confidence in Nvidia’s growth trajectory, forecasting earnings per share of $8 in 2026 and $11 in 2027, both well above market consensus.