Nvidia is discovering that wearing the AI crown comes with a heavy burden. The chip giant's stock tumbled 2.6% Tuesday as mounting pressure from Google's custom AI chips and Meta's strategic pivot signal the first real cracks in what seemed like an unshakeable semiconductor empire.
The AI semiconductor throne that Nvidia has occupied for the past two years is starting to feel less secure. Tuesday's 2.6% stock drop reflects a month of escalating challenges that have forced the typically confident chipmaker into an unusual defensive posture.
The latest blow came from an unexpected direction. Meta, one of Nvidia's biggest customers, sent shockwaves through the market Monday when it signaled interest in using Google's custom AI chips for its own data centers. This isn't just about diversifying suppliers - it's about potentially replacing Nvidia's GPUs with Google's TPUs for critical AI workloads.
"The Big Short" investor Michael Burry had already been poking holes in Nvidia's armor, alleging that companies are overestimating the lifespan of Nvidia's chips to inflate their profits. His accounting critique struck at the heart of the AI spending boom that's driven Nvidia's meteoric rise.
But it was Google's November 18th announcement that really rattled the kingdom. The search giant unveiled its new AI model Gemini 3, powered entirely by its in-house AI chips rather than Nvidia's hardware. For a company that's built its empire on being the indispensable backbone of AI development, watching a major player go solo represents an existential threat.
The pressure became too much for Nvidia to ignore. Breaking from its usual above-the-fray stance, the company posted on X that its technology remains "more powerful and versatile" than competing ASIC chips like Google's TPUs. Separately, Nvidia circulated a private memo to Wall Street analysts specifically refuting Burry's allegations about chip depreciation practices.
These defensive moves reveal how the competitive landscape has shifted. When you're the undisputed king, silence projects strength. When challengers emerge, staying quiet can look like weakness. But responding can signal insecurity - a delicate balance that Nvidia is now navigating in real-time.
Google's TPU strategy represents more than just competition; it's a blueprint for how tech giants can reduce their dependence on Nvidia. By designing chips optimized for their specific AI workloads, companies like Google can potentially achieve better price-performance ratios while maintaining control over their technology stack.
