TLDR
- Nvidia stock fell 6% after reports Meta Platforms may switch to Google’s tensor processing units in 2027
- Shares reached their lowest point in nearly three months on competition concerns
- Jim Cramer believes the selloff is overdone and sees a buying opportunity at current levels
- Nvidia has $500 billion in orders for its Blackwell and Vera Rubin chip platforms
- Demand for Nvidia’s GPUs remains strong despite some customers showing price sensitivity
Nvidia shares dropped 6% Tuesday after reports emerged that Meta Platforms is considering a switch to Google’s tensor processing units for its data centers. The move would represent a shift away from Nvidia’s dominant GPU technology.
NVIDIA Corporation, NVDA
The Information broke the story, sending Nvidia stock to its lowest level in nearly three months. The decline extended recent weakness in AI-related stocks as investors question valuations and massive data center spending plans.
Meta’s potential switch to Google TPUs would begin in 2027. The timing follows Google’s recent release of Gemini 3, an AI model trained on custom chips co-designed with Broadcom rather than Nvidia hardware.
Competition Heats Up in AI Chips
Google’s tensor processing units are gaining traction as an alternative to Nvidia’s graphics processing units. The custom chips represent a direct challenge to Nvidia’s dominance in AI workloads.
Alphabet has been developing its TPU technology for years. The Gemini 3 release showcased the capabilities of these custom chips, raising questions about whether other companies will follow Meta’s potential lead.
Jim Cramer of CNBC called the selloff a buying opportunity. “I think Nvidia has been slighted here,” he said on Squawk on the Street.
Cramer pointed to Nvidia’s recent earnings report showing visibility into $500 billion in orders. The order book covers Blackwell and next-generation Vera Rubin chip platforms. He also noted Nvidia trades at what he considers a low price-to-earnings multiple.
Demand Remains Strong Despite Concerns
The CNBC host dismissed fears of customers abandoning Nvidia. “I’m not seeing customers run away from them. I see some customers being price sensitive,” Cramer explained.
He argued this price sensitivity won’t damage Nvidia’s business. “Price goes down when there is no demand. The demand is insatiable for Nvidia,” he said.
Cramer acknowledged the competition concerns are real. Both Alphabet and Meta developing alternative chip strategies represents genuine business risk. However, he compared the current situation to his early exit from Alphabet, which cost him returns when the stock later doubled.
“You either believe in artificial intelligence or you should just stay away,” Cramer said on Mad Money. He suggested investors without conviction in AI should avoid the sector entirely rather than panic selling during volatility.
The tech sector has faced broader pressure recently. Concerns about AI company valuations and the sustainability of data center spending have weighed on multiple stocks beyond Nvidia.
Cramer’s charitable trust holds positions in Nvidia, Meta, and Broadcom through the CNBC Investing Club. He has consistently advocated for “owning, not trading” Nvidia stock as part of his investment strategy.
Nvidia shares closed at $175.60 in after-hours trading, down an additional 1.25%. The stock has declined from recent highs as competition concerns mount and investors reassess AI investment timelines.
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Source: https://blockonomi.com/nvidia-nvda-stock-jim-cramer-explains-why-hes-still-bullish-after-drop/