Nvidia Shares Dip Amid Geopolitical Concerns and Rising Competition

Nvidia NVDA -1.82% saw a slight decline in early Friday trading. The chip manufacturing giant, despite expanding its investment footprint, is facing headwinds from geopolitical uncertainties. Shares of Nvidia were down 0.8%, trading at $120.14 during morning hours.

Market Volatility and Geopolitical Risks

The stock experienced a volatile day on Thursday, closing up 2.6% after fluctuating between gains and losses. Investors are grappling with the implications of former President Donald Trump’s statements regarding Taiwan, a key player in the global semiconductor supply chain. The ongoing geopolitical tensions are adding layers of complexity to the semiconductor sector.

Wedbush analyst Daniel Ives addressed these concerns in a recent research note. Ives stated that the ‘Trump trade’ does not undermine the AI Revolution thesis or the tech bull market. Instead, it represents a negotiation process that will likely be lengthy and complex. Wedbush analysts maintain a target price of $120 and hold a Buy rating on Nvidia stock.

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Rising Competition from Broadcom

Adding to Nvidia’s challenges, Broadcom AVGO -0.77% is reportedly in discussions with OpenAI, the developer of ChatGPT, to develop a new AI processor. This development, reported by The Information, highlights increasing competition within the AI chip market. In response to these reports, Broadcom’s shares rose 0.9% in premarket trading.

Investments in Robotics

On a positive note, Nvidia is bolstering its efforts in the robotics sector. The company recently disclosed in a Securities and Exchange Commission filing that it acquired 62,500 shares of sidewalk-robot delivery firm Serve Robotics (SERV) for $4 each last July. The share price has increased by 136.88%. Nvidia further invested in the company in April by converting a promissory note into over one million shares at $2.42 each. Serve Robotics’ shares surged 68% to $4.42 in premarket trading.

Impressive Year-to-Date Performance

Despite the recent dip, Nvidia’s stock has shown remarkable growth this year. As of Thursday’s close, shares have surged 145% year-to-date. This impressive performance contrasts with a 16% rise in the S&P 500 index and a 19% increase in the Nasdaq Composite Index over the same period.

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