Nvidia stock price takes another hit as Wall Street debates an AI bubble. Here's why it's down today

"Concerns about an AI bubble and increased competition are weighing on Nvidia as the stock fell to a three-month low on Wednesday. Shares of the Santa Clara, California-based company tumbled more than 3% amid a broader decline for those chipmakers that are key to the artificial intelligence boom. Shares of Advanced Micro Devices and Broadcom were also down 4% and 5%, respectively."

"In recent weeks, a slew of companies have made moves that could chip away at Nvidia's domination as the go-to maker of chips for the AI industry. One such company, MetaX Integrated Circuits of China, debuted an initial public offering on Wednesday and surged nearly 700%. BEHIND NVIDIA'S DECLINE Once a darling among stock market investors, the hits keep coming for Nvidia lately."

"Some of its chips are effectively banned in China, while the company has also become a poster child for concerns of a bubble in the AI industry that some investors worry is reminiscent of the dot-com bubble about 25 years ago. In late October, Nvidia became the first stock to be valued at more than $5 trillion. Even though enthusiasm has cooled since then, some investors still worry that the stock prices of AI-related companies are completely disconnected from reality."

"And the constant rumblings of skepticism don't show any sign of letting up as Nvidia has become a popular target for short-sellers. Some prominent investors who have successful track records of calling other market declines have become vocal critics of the AI boom. Michael Burry and Jim Chanos are both shorting Nvidia stock, meaning they will make money if the price goes down further."

Nvidia shares dropped to a three-month low amid concerns about an AI bubble and rising competition, with related chipmakers also declining. New entrants such as MetaX Integrated Circuits surged after an IPO, illustrating intensifying competition in AI chips. Nvidia faces export constraints, with some chips effectively banned in China, and has drawn significant short-selling interest from investors like Michael Burry and Jim Chanos. Despite skepticism, UBS projects global AI capital expenditure could rise nearly 35% next year to $571 billion and expects further gains through the decade.

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