NVDA Stock Alert: The Prices of Nvidia’s Chips Could Drop for Some Time Amid Intensifying Competition

The prices for Nvidia's (NVDA) B200 AI chips, which were released in the second quarter of 2024, tumbled from $6.11 per hour on May 30 to $4.22 “by June 21." The steep decline suggests that Nvidia's rising competition is depressing the overall value of its chips. If that is the case and the trend continues, the tech giant's growth could significantly slow in the short-to-medium term, potentially causing NVDA stock to underperform the Nasdaq exchange during that period. 

Providing some backing for the latter thesis, many individuals on Kalshi, a predictions website, apparently expect the trend to continue in the very short term.

However, over the long term, Nvidia's shares are likely to perform quite well as tens of millions of its chips are incorporated into self-driving vehicles and robots. 

About Nvidia Stock

The runaway leader of the rapidly growing AI chip market, Nvidia's market capitalization has now reached $4.84 trillion, making it one of the most successful companies globally. Some of the firm's biggest customers are hyperscalers, including Alphabet (GOOG) (GOOGL), Microsoft (MSFT), and Meta Platforms (META). Nvidia also partners with OpenAI and other AI developers.

Fueled by huge demand for its chips, Nvidia's revenue has soared exponentially since 2022. Most recently, the chipmaker generated more than $81 billion in revenue in the first quarter of fiscal 2027, representing a huge gain of 85% year-over-year (YOY).

Nvidia's Competition is Intensifying

Google has already sold many of its AI chips to other firms, and Amazon (AMZN) may be following suit. Meanwhile, the AI chip businesses of Advanced Micro Devices (AMD), Marvell (MRVL), and Broadcom (AVGO) continue to expand very rapidly. Finally, the AI-chip rental businesses of companies like Coreweave (CRWV) and Nebius (NBIS) are progressing in growth rapidly. 

Taken together, Nvidia's competition is continuously expanding at an enormous speed.

Additionally, all of these competitors tend to provide AI chips at much cheaper prices than Nvidia does, and it's only natural for Nvidia's prices to be slumping at this point.

The Demand for Nvidia's Chips Should Eventually Soar

With heavyweights like Uber (UBER), Alphabet, Tesla (TSLA), and even Amazon entering the self-driving space, the demand for Nvidia's auto chips should skyrocket over the longer term. Meanwhile, one source predicts that the demand for AI-powered robots will soar from $7.46 billion in 2026 to $60.68 billion “by 2034.” Consequently, the sales of Nvidia's AI chips for robots should also jump sharply in the longer term.

The Bottom Line on NVDA Stock

Investors may want to consider avoiding NVDA in the short-to-medium term. But buying its shares in a year or two would probably be a good idea.