Nvidia (NASDAQ:NVDA) edged lower in U.S. premarket trading on Wednesday, hinting at a continuation of the previous session’s weakness as investors reassessed the chipmaker’s long-standing dominance in the artificial intelligence hardware market.
The stock dropped 2.6% on Tuesday and is now down about 12% so far this month, marking a notable reversal for a company that has been the face of the AI-driven market rally over the past several years.
The latest pullback highlights an emerging divergence within the AI trade, where companies tied to artificial intelligence have historically moved in tandem.
Alphabet (NASDAQ:GOOG) continued to buck the weakness, inching higher ahead of the market open as it moves closer to a $4 trillion market capitalization. Following a 1.6% gain on Tuesday, Alphabet shares have risen 15% this month.
Its recent strength has been supported by a report that Alphabet is in discussions with Meta (NASDAQ:META) to provide Google-designed AI chips for Meta’s data centers. Google’s momentum has also been lifted by strong early feedback on its Gemini 3 AI model and a fresh investment from Berkshire Hathaway. The company has been working aggressively to establish itself as a leading AI chip developer, partly to reduce its reliance on external suppliers.
In a note to clients, Citi analysts wrote that Google’s AI products and services are “gaining market share,” and said the company’s position could be reinforced by its massive user base spanning billions of active accounts.
The prospect of Google expanding its chip offerings raised concerns that Nvidia could face more direct competition. The development also added to broader unease around an increasingly complex web of financial relationships in the AI ecosystem—some involving Nvidia funding customers who in turn spend heavily on its chips.
Although Nvidia’s stock is still up more than 29% over the past year, sentiment around the name—and the sector more broadly—has cooled amid worries that such arrangements could inflate an AI “bubble” reminiscent of the dot-com era.
The Wall Street Journal reported that Nvidia has been attempting to push back against mounting criticism and short-selling interest, including from Michael Burry, the investor featured in “The Big Short.” According to the report, Nvidia emphasized that its business model was “economically sound” and its disclosures “complete and transparent,” though some analysts said the company’s tone appeared “defensive.”