Billions wiped off Nvidia amid fears Google is catching it up in the AI race

Nvidia saw £240billion wiped off its value as fears grew that the chip giant was losing its lead in the artificial intelligence (AI) race.

It fell as much as 7 per cent in early trading on Wall Street after reports that one of its main rivals, Google owner Alphabet, was signing up clients for its own AI-specialised chips.

Firms linked to Nvidia also slipped on the back of worries it could be leapfrogged in the race to power the AI boom.

Oracle, a software firm controlled by US tech billionaire Larry Ellison that has pledged to spend billions on Nvidia’s chips, fell around 3 per cent during the sell-off, while computer server maker Super Micro Computer, a key partner to the tech giant, slumped 2.5 per cent.

Alphabet, however, briefly rose to a record high of $328 on hopes it could take the lead in the AI boom. The stock was still up at $323 while Meta gained 3.8 per cent.

Chris Beauchamp at investment platform IG said ‘it certainly seems like Alphabet is poised to snatch market share away’ from Nvidia.

Slump: Nvidia fell as much as 7% on Wall Street following reports that Google owner Alphabet was trying to sign up clients for its own AI-specialised chips

Excitement around Alphabet’s AI capabilities was fuelled last week by the release of a new version of its chatbot, known as Gemini 3, which is powered by its own chips and considered by some to be better than OpenAI’s ChatGPT which uses Nvidia hardware. 

Charlie McElligott, a strategist at investment firm Nomura, told the FT the new version of Gemini had ‘reset’ the AI market and could have a similar impact to DeepSeek, a Chinese AI start-up that triggered a sell-off among US tech stocks in January.

The wobble in US markets came as the FTSE 100 rose 0.8 per cent, or 74.62 points, to 9609.53, boosted by banking stocks following reports the sector may be spared a previously threatened tax in Rachel Reeves’ Budget later today.

But the ripple effects of Nvidia’s share price wobble are likely to fuel concerns about an AI-fuelled ‘bubble’ that has dominated stock markets this year.

Financial institutions, including the Bank of England, have warned that the soaring value of AI companies could cause a widespread market plunge if the bubble bursts.

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