Shares of NVIDIA Corporation (NASDAQ:NVDA) were set to open lower on Friday, with premarket indications pointing to a 2.35% decline to $202.52. The drop comes despite news of a significant new order from Japan for AI infrastructure, highlighting the complex demand environment facing the semiconductor giant.
At the indicated opening level, Nvidia shares had fallen 4.7% from their Wednesday close of $207.40. Based on a preliminary estimate using the share count from May 15, the market value loss amounts to approximately $242 billion.
Japan's Rubin Order: Context and Scale
The Japanese order, which involves a new AI factory funded by the Japanese government, is substantial when considered in isolation. KeyBanc analyst John Vinh estimates that shipments of Nvidia's Rubin GPU will total between 1.7 million and 1.8 million units in 2026. The Japanese order of 27,500 GPUs represents roughly 1.6% of the midpoint of that forecast range.
While the unit count is not expected to significantly alter annual shipment forecasts, the project's operating schedule extends well beyond the coming several quarters. The 140-megawatt facility is set to deploy 13,750 Vera CPUs, with construction beginning in April 2027 and operations planned to commence in June 2028.
"Japan invented modern manufacturing," said Nvidia CEO Jensen Huang in a company statement regarding the project.
Broader Market Weakness
The decline in Nvidia shares reflects a broader adjustment in the semiconductor sector. The Philadelphia Semiconductor Index has dropped over 19% since its late-June peak and was on track for its steepest weekly decline since March 2025. The weakness extended across the AI supply chain in premarket trading.
Advanced Micro Devices (NASDAQ:AMD) was indicated to open at $485.15, down 3.15% from its Thursday close of $500.94, which itself had fallen 5.33%. Taiwan Semiconductor Manufacturing (NYSE:TSM) was set to open at $396.79, down 3.16% from Thursday's close of $409.74, a decline of 2.32%.
Contrasting Earnings Reports
The market weakness comes despite strong earnings reports from key players. TSMC reported a record 77.4% increase in second-quarter profit, surpassing analyst expectations. Revenue totaled $40.2 billion for the period, and the company projected third-quarter revenue in the range of $44.6 billion to $45.8 billion.
Nvidia itself posted quarterly revenue of $81.6 billion, with data-center revenue climbing to $75.2 billion, a rise of 92% compared with a year earlier. The company's shares had advanced 8.3% for the week ending July 10, but the indicated price for Friday was 4.0% below that closing level.
Key Risks and Outlook
Several risks could impact Nvidia's forecasts, including harsher export restrictions, delays in product transitions, and reductions in customer spending. The company notes that transitions may cause revenue to fluctuate more sharply. Nvidia remains largely excluded from China's data-center sector.
The key test next week is set for Wednesday when Alphabet (NASDAQ:GOOGL) reports results, drawing attention to AI capital expenditure. Any reduction in spending may impact the chip supply chain and further weigh on sentiment.
