NVIDIA STARTS TO SLOW DOWN BUT STILL WEARS THE CROWN

NVIDIA: Still Growing, But Facing New Headwinds

NVIDIA has been the poster child of the artificial intelligence revolution. Its chips power everything from ChatGPT to self-driving cars, and its meteoric rise has taken the stock to a market cap above $4 trillion. To put that in perspective, NVIDIA is now worth more than Netflix, UnitedHealth, Coca-Cola, Berkshire Hathaway, Walmart, Costco, Home Depot, and Johnson & Johnson combined. It makes up about 8% of the entire S&P 500 index—a staggering level of dominance.

But despite this historic run, cracks are starting to appear in the growth story. Let’s break down the key challenges.

Growth Is Slowing

Recent earnings data shows that NVIDIA is still growing, but at a slower pace. After the initial AI boom following ChatGPT’s launch in late 2022, NVIDIA’s revenue surged. However, charts show quarter-over-quarter growth cooling off.

Much of the slowdown is tied to China, once one of NVIDIA’s biggest markets. Revenue from China fell 24.5% year-over-year, as U.S. trade restrictions on high-end chips bite into demand. At the same time, U.S., Singapore, and Taiwan sales remain strong, but China’s decline is a major headwind.

With China historically representing a large slice of global semiconductor demand, this drop is more than just a short-term hiccup—it’s a structural risk.

Alibaba Steps Into the Arena

The slowdown in China comes as Alibaba ramps up its own chip ambitions. The Chinese tech giant recently launched a new AI chip designed to reduce reliance on U.S. hardware. Notably, the chip is compatible with NVIDIA’s software, making it easier for customers to switch.

Alibaba’s cloud business, which grew 26% year-over-year, is leveraging this chip to strengthen its AI competitiveness. If Chinese firms adopt homegrown chips over NVIDIA’s, it could worsen the company’s challenges in its second-largest market.

A Once-in-a-Generation Company

Despite the risks, it’s important to acknowledge just how dominant NVIDIA has become. Few companies in history have reshaped an industry as completely as NVIDIA has with GPUs and AI computing. It is the engine of the AI revolution and still delivers incredible margins, cash flow, and innovation.

Calling NVIDIA a once-in-a-generation company is not an exaggeration. Its influence stretches far beyond tech—it now shapes national policy, supply chains, and even geopolitics.

Are We in an AI Bubble?

AI is without question a revolutionary technology—arguably as big as the internet itself. But even revolutions can get overhyped in the short run.

The late 1990s dot-com bubble is a reminder: the internet was transformative, yet valuations ran far ahead of fundamentals, leading to a painful crash in 2000.

Today, with NVIDIA at $4 trillion, and AI startups raising billions without clear business models, some are asking whether we’re in a similar moment. AI’s utility is real, but valuations may have sprinted too far ahead of sustainable earnings.

The Bottom Line

NVIDIA remains the backbone of the AI boom, but its growth story is facing two key challenges:

1. Geopolitics – U.S.-China trade tensions are cutting into sales.

2. Competition – Chinese giants like Alibaba are developing alternatives.

For long-term investors, NVIDIA is still a powerhouse. But in the short run, the stock may face more turbulence—especially if AI’s hype cycle unwinds like tech in the early 2000s.