Nvidia (NASDAQ:NVDA) shares rose in early U.S. trading on Wednesday, recovering part of the steep losses suffered in the previous session as investors reassessed concerns about the chipmaker’s dominance in the fast-growing artificial intelligence hardware market.
The stock advanced 2.1%, partially offsetting Tuesday’s decline. Nvidia has been one of the biggest winners of the AI boom over the past several years, with soaring demand for its accelerators driving an exceptional rally in its share price. But the latest bout of volatility highlights a widening divide within the AI trade, which for years had seen major players move in near lockstep.
Alphabet (NASDAQ:GOOG), meanwhile, edged slightly lower after gaining 1.6% on Tuesday. The Google parent has been inching closer to a $4 trillion valuation, helped by optimism surrounding its AI roadmap.
Tuesday’s gains for Alphabet followed media reports that the company is in discussions with Meta (NASDAQ:META) to supply Google-designed AI chips for Meta’s data centers. This development comes as Google continues to push aggressively into AI hardware—bolstered by strong early reception to its Gemini 3 model and a recent investment from Warren Buffett’s Berkshire Hathaway—in an effort to reduce dependence on outside suppliers.
Analysts at Citi wrote that Google’s AI offerings are “gaining market share,” noting that the company’s reach into billions of monthly active users could further solidify its position.
Google’s strategic ambitions, however, have raised questions about rising competitive pressure for Nvidia. The developments also deepened worries about the complex ecosystem of circular financing arrangements across the AI landscape, many of which hinge on Nvidia funding customers who then reinvest heavily into Nvidia products. Critics fear these mechanisms could inflate an AI “bubble,” drawing parallels to the dot-com era.
Despite gaining more than 31% over the past year, Nvidia has faced increasing skepticism from some investors. According to The Wall Street Journal, the company has taken steps to counter pointed criticism—particularly from high-profile short-seller Michael Burry of “The Big Short” fame—by asserting that its business model is “economically sound” and its financial disclosures are “complete and transparent.” Analysts quoted in the report, however, said the company’s defensive tone may have raised additional concerns.