The AI chip king is feeling the heat. Nvidia shares dropped 2.6% Tuesday as the company took the unusual step of publicly defending its dominance against mounting pressure from Google's custom chips and criticism from short-seller Michael Burry. The chipmaker's rare public response signals growing anxiety about challengers to its $3 trillion AI empire.
The crown is getting heavy for Nvidia. After months of unquestioned dominance in AI computing, the chip giant is now fighting battles on multiple fronts - and doing something it rarely does: defending itself publicly.
Shares slumped 2.6% Tuesday as investors digested a perfect storm of competitive threats. The latest blow came from Meta, which according to The Information is seriously considering Google's custom TPU chips for its data centers. That's a potential defection from one of Nvidia's biggest customers.
The threat became real last week when Google unveiled its Gemini 3 AI model - powered entirely by its own silicon. Unlike previous Google models that relied heavily on Nvidia's H100 chips, Gemini 3 runs on Google's custom tensor processing units, proving that viable alternatives exist.
Nvidia broke its usual silence Tuesday, posting on X that its GPUs are "a generation ahead of the industry" compared to ASIC chips like Google's TPUs. The company emphasized its chips' versatility across different AI workloads, a not-so-subtle dig at specialized alternatives.
But the pressure isn't just coming from competitors. Michael Burry, the investor famous for predicting the 2008 financial crisis, has been arguing that tech giants are artificially inflating profits by overestimating how long Nvidia's chips will last. Burry claims companies are using longer depreciation schedules than warranted, making their AI investments look more profitable.
Nvidia quietly pushed back against Burry's allegations with a private memo to Wall Street analysts - another unusual move for a company that typically lets its financial results do the talking. The memo disputed the accounting claims, but its very existence suggests management is taking the criticism seriously.
The timing couldn't be worse. stock has faced all month, with some investors questioning whether its nearly $4 trillion market cap can be justified. The company trades at over 60 times earnings despite slowing growth in some segments.
