"In some ways, the slowing in growth is unexpected. Artificial intelligence (AI) projects are spread across hundreds of companies, or even more. The world's largest tech companies, including Microsoft, Alphabet, Amazon, Meta, and OpenAI, have committed over $350 billion to build these. They have almost unlimited capital. Additionally, institutional investors want in on the action. Capital available from them will run into the hundreds of billions of dollars as well."
"Even Nvidia's stock performance is a sort of consensus that revenue hypergrowth is over. Shares are up 1,350% in the past five years, 53% in the past year, and 31% year to date. When there was doubt about AI growth early in the year, the stock actually dropped from $150 a share at the start of 2025 to $92 in April. Nvidia's shares are no longer invulnerable."
"Nvidia has headwinds it did not have a year ago. Its struggle to get into China is a primary one. First, the United States objected to these sales. More recently, the Chinese government objected. China said it could build chips as good as Nvidia's. If so, revenue from the world's second-largest AI market based on computing power has disappeared. China's AI products appear to be catching up to those in the U.S. Unlike in America, AI investments directly from the central government are huge."
Nvidia's revenue surged from $27 billion in fiscal 2023 to $131 billion in fiscal 2025, but growth is slowing. Recent revenue rose about 70%, with fiscal second-quarter revenue up 56% to $46.7 billion year over year. Guidance for the current quarter indicates a smaller percentage increase. Major technology companies including Microsoft, Alphabet, Amazon, Meta, and OpenAI have committed over $350 billion to AI projects, and institutional capital promises further investment. Nvidia's stock gained dramatically over five years, yet the shares fell earlier in 2025. New headwinds include U.S. and Chinese restrictions on sales and rising Chinese chip development and state-backed AI investment.
Read at 24/7 Wall St.
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