Nvidia Corp. shares dipped on Sunday evening following a report that China’s Huawei Technologies is preparing to launch a new artificial intelligence processor aimed directly at Nvidia’s dominance. According to Robinhood data, Nvidia (NASDAQ:NVDA) fell as much as 1.8% to $109.06, before a slight recovery to $109.48 by 22:34 ET (02:34 GMT).
The Wall Street Journal reported that Huawei is testing its most advanced AI chip yet, the Ascend 910D, designed to rival Nvidia’s H100 processor. The H100 has been crucial for Chinese firms developing AI technologies but was designed under restrictions that limit high-end tech exports to China.
While Nvidia has already signaled facing new regulatory hurdles on the sale of H100 chips to China, the emergence of a credible domestic alternative further threatens the company’s market share in one of its key regions.
Key points:
- Huawei’s Ascend 910D targets AI chip markets dominated by Nvidia.
- Nvidia’s H100 faces tougher export restrictions to China.
- China remains a major revenue contributor for Nvidia.
China’s Tech Drive Adds to Nvidia’s Woes
The report on Huawei’s new chip underscores a broader trend of China accelerating its self-sufficiency in critical technologies, particularly under the weight of U.S. export controls. The development of the Ascend 910D signals a significant strategic push by Beijing to reduce reliance on American semiconductor giants.
Nvidia’s booming valuation over the past two years was fueled heavily by soaring demand for AI chips, but cracks began appearing in early 2025. Analysts have pointed out that newer AI models require less computing power, potentially dampening future hardware demand. The added competition from Huawei only exacerbates these risks.
Moreover, U.S.-China tensions continue to complicate the tech landscape. With Huawei aggressively expanding its domestic offerings and China prioritizing local innovation, Nvidia’s foothold could weaken more rapidly than previously anticipated.
Valuation Concerns Loom Over Nvidia
Investors have grown cautious about Nvidia’s sky-high valuations as headwinds multiply. Although the company has dominated the AI chip industry, shifting global dynamics suggest tougher competition ahead.
Important factors weighing on Nvidia’s outlook:
- Reduced AI chip intensity in emerging models.
- Heightened regulatory risks for U.S. tech exports.
- Rising Chinese competition led by Huawei and others.
While Nvidia remains a heavyweight in the AI space, maintaining its lead will demand strategic pivots, including diversifying markets and accelerating innovation beyond traditional AI training chips. Investors will be closely watching upcoming earnings reports for signs of how Nvidia plans to tackle these evolving challenges.