Nvidia (NASDAQ:NVDA) just hit a bump, falling as much as 3.4% to over $135 as investors experienced a whirlwind of developments. A Chinese startup, DeepSeek, unveiled an AI model trained on Nvidia’s H800 GPUs at a fraction of the cost of Western players. On the one hand, it’s a clear nod to the efficiency of Nvidia’s technology. On the other hand, it fuels new fears about export restrictions and regulatory hurdles. With CEO Jensen Huang set to debut Nvidia’s next-generation Rubin chip at CES in January, the market is preparing for more clues about the company’s game plan in this high-stakes AI chess match.
Meanwhile, 2025 may not just be Nvidia’s playground. While it controls a whopping 90% of the AI chip market, challengers like Positron and SambaNova are gearing up to grab a piece of the pie. Their goal? The fast-growing inference computing segment sees it as the “brainpower” behind AI’s real-time responses. Nvidia’s Blackwell chips are strong players, but the question is: can it maintain its lead as startups look for the sweet spot of cost-effective, high-performance hardware? Even Jensen Huang admits that market dynamics are changing, but he’s banking on Nvidia’s existing dominance to maintain the frontier.
Adding fuel to the fire, Nvidia is caught in the crosshairs of US-China tensions. The US Commerce Department wants answers about how Nvidia’s chips continue to make their way to China despite strict controls, as China retaliates with rare mineral bans and antitrust investigations into Nvidia’s takeover of Mellanox. Nvidia’s ability to juggle these geopolitical landmines while staying at the forefront of the AI arms race could determine its future. Investors? Strap in, it’s going to be a wild ride.
This article first appeared on GuruFocus.