Nvidia Corporation (NVDA) ended Tuesday's trading session at $208.19, down 0.2% or 45 cents, despite a significant endorsement from Apple Inc. (AAPL). Apple announced it will deploy Nvidia graphics processing units (GPUs) within Google Cloud infrastructure to handle its most demanding Apple Intelligence workloads. This marks a notable shift for Apple, which has historically preferred to keep its hardware operations in-house.
The broader technology sector faced headwinds, with the Nasdaq Composite declining 1% and the Philadelphia Semiconductor Index dropping 1.9%. The selloff intensified as investors reduced exposure to high-flying AI names. Nvidia's stock remained under pressure even as the Apple news provided a fresh vote of confidence in its AI platform.
Apple's decision to use Nvidia GPUs represents its first move to run Private Cloud Compute systems outside its own data centers. The company confirmed that its top server-side model, AFM 3 Cloud Pro, now operates on Nvidia GPUs in Google Cloud, a collaboration involving Apple, Google, and Nvidia. However, the revenue implications remain unclear, as Apple is procuring the chips through Google Cloud rather than purchasing them directly from Nvidia.
The competitive landscape is intensifying. Alphabet Inc.'s (GOOGL) Google stands to benefit as both a cloud provider and a competitor in AI chips with its tensor processing units (TPUs). Reports indicate Google has ordered over 3 million TPUs from Intel Corporation (INTC) for 2028, while Nvidia is exploring Intel's technology for a potential multi-GPU chip. This diversification reflects a broader industry push to reduce reliance on Taiwan Semiconductor Manufacturing Company (TSM) amid geopolitical tensions.
China poses a significant risk. Reuters reported that Beijing is developing a five-year plan worth approximately 2 trillion yuan ($295.43 billion) to build new data centers, with a goal of sourcing at least 80% of key components like AI chips from domestic suppliers such as Huawei. Such a policy would largely exclude Nvidia and Advanced Micro Devices (AMD) from the Chinese market, though the plan remains in early stages and could change.
Policy pressures from Washington are also mounting. Bipartisan senators have urged the Trump administration to tighten restrictions on contract chipmakers like TSMC, aiming to prevent advanced AI chips from reaching Chinese firms' overseas subsidiaries. This follows earlier export control measures designed to close loopholes in chip shipments.
Despite these challenges, Nvidia's financial performance remains robust. The company reported fiscal first-quarter revenue of $81.6 billion, up 85% year-over-year, with data-center revenue surging 92% to $75.2 billion. CEO Jensen Huang highlighted an accelerating buildout of AI factories. Nvidia also authorized an additional $80 billion for share buybacks and increased its quarterly dividend.
Analysts remain cautious. D.A. Davidson's Gil Luria noted that supporting Intel aligns with U.S. manufacturing goals, a factor relevant for companies working with the administration. Meanwhile, the AI trade appears crowded, and profit-taking could lead to sharp declines. The key question is whether Apple's endorsement will translate into sustained demand or simply add to the high expectations already priced into Nvidia's stock.
