NVDA Stock Breaks $200 as $250B OpenAI Deal Against China’s Cheap Models Gives Apple Top Market Capitalization from Nvidia

Nvidia shares have slipped below $200 as a chip selloff, growing competition from cheaper Chinese AI models, potential hedge-fund stress, and massive AI financing plans fuel fresh doubts about the sustainability of the sector’s extraordinary spending boom.

Nvidia Stock Falls Below $200 Again as AI Spending Fears Intensify

Nvidia shares have resumed their decline, slipping back below the psychologically important $200 level as weakness across the global semiconductor sector combines with growing concerns about AI valuations and the enormous capital spending required to build the next generation of data centers.

The latest decline comes as Asian semiconductor stocks also faced heavy selling pressure, highlighting a broader deterioration in sentiment toward the chip industry.

For Nvidia, the pressure is particularly significant because the company’s valuation remains heavily dependent on expectations that AI infrastructure spending will continue accelerating for years.

That assumption is increasingly being challenged.

Nvidia Stock Faces Renewed Selling Pressure

Nvidia’s recent recovery has lost momentum as investors become more cautious toward high-growth semiconductor stocks.

The stock had managed to rebound above $215 after previously approaching the $200 area, but the latest decline below that level suggests buyers are struggling to regain control.

The weakness is not isolated to Nvidia.

AMD, Intel, Arm and other semiconductor names have also experienced sharp declines as investors reassess the extraordinary valuations attached to the AI investment cycle.

Memory stocks have been particularly vulnerable. Sandisk, for example, suffered another decline after an earlier sharp drop, leaving the stock substantially below its late-June peak.

The scale of the selling has raised speculation that forced deleveraging or hedge-fund losses could be contributing to the broader technology unwind.

While such reports remain speculative, the market reaction demonstrates how quickly sentiment can deteriorate when highly valued technology stocks begin falling simultaneously.

Kimi K3 Adds to China Competition Fears

One of the latest concerns is the emergence of Kimi K3, an open-source AI model developed by China’s Moonshot AI.

The development has intensified debate over whether advanced AI models have durable competitive moats.

Investors have long assumed that enormous spending on AI infrastructure would create powerful barriers to entry. However, the rapid development of increasingly capable Chinese models is challenging that assumption.

If companies can produce competitive AI systems with lower-cost models and less expensive infrastructure, demand for the enormous computing resources that currently drive Nvidia’s growth could eventually face pressure.

The concern is not necessarily that Kimi K3 will immediately reduce Nvidia’s revenue.

Instead, the bigger question is whether advances in cheaper and more efficient AI models could reduce the amount of computing power required to achieve similar results.

That possibility could undermine some of the more aggressive assumptions supporting Nvidia’s valuation.

OpenAI Financing Raises New Spending Questions

Another major source of uncertainty involves Nvidia’s reported discussions surrounding financing for OpenAI.

According to a Wall Street Journal report cited in the market discussion, Nvidia is in talks to provide roughly $250 billion in financing guarantees as part of a massive AI infrastructure project.

The proposed support would reportedly help OpenAI secure a lease for a 10-gigawatt data center project being developed by SoftBank subsidiary SB Energy in southern Ohio.

The overall project is expected to involve more than $500 billion in spending, including the computing hardware required to operate the facility.

The scale is extraordinary.

However, the financing structure is raising uncomfortable questions about whether the AI industry’s enormous infrastructure buildout is increasingly dependent on complex financing arrangements rather than customer balance sheets and organically generated cash flow.

Investors may begin asking whether AI companies are creating a circular ecosystem in which chipmakers finance the infrastructure that ultimately creates demand for their own products.

If that perception gains traction, the sector could face greater scrutiny over the quality and sustainability of AI-related demand.

The AI Spending Boom Faces a Reality Check

The central concern for Nvidia remains the sustainability of the AI capital expenditure cycle.

Hyperscalers continue spending enormous amounts on data centers, GPUs, networking equipment and energy infrastructure.

But the financial burden is becoming increasingly visible.

Companies are now under pressure to demonstrate that their AI investments can generate sufficient revenue and profits to justify the spending.

If returns disappoint, cloud providers could eventually slow capital expenditure growth.

That would represent a significant risk for Nvidia because the company’s exceptional revenue growth depends heavily on continued investment by the world’s largest technology companies.

The problem is that Nvidia’s valuation already assumes an extended period of extraordinary growth.

Any slowdown could therefore have a disproportionate impact on the stock.

Custom Chips Threaten Nvidia’s Dominance

Nvidia also faces a longer-term threat from its own largest customers.

Major cloud companies are developing custom AI chips and application-specific integrated circuits to reduce their reliance on Nvidia’s GPUs.

Nvidia remains the dominant supplier of AI accelerators, but the rise of proprietary silicon could gradually reduce demand for Nvidia hardware in certain workloads.

This is particularly important because the largest cloud companies are simultaneously Nvidia’s biggest customers and its potential competitors.

If internal chip development becomes increasingly successful, Nvidia could eventually face pressure on market share, pricing power and margins.

That threat may not immediately affect the company’s results, but it represents a structural risk to the long-term growth narrative.

Technical Picture Reflects Volatility

Nvidia’s technical setup mirrors the shifting sentiment. The stock slipped to its 20-day simple moving average (gray) in early May, but reversed back up, so it provided reliable support and NVDA reached a high of $236 before earnings. But then the stock reversed down and sellers headed to the 100 SMA again after breaking below $200 today.

NVDA Chart Daily – Failing at the 50 SMA

China and Export Controls Add Geopolitical Pressure

Nvidia’s exposure to China also remains a major concern.

U.S. officials have raised allegations involving Chinese AI companies and the potential circumvention of restrictions on advanced Nvidia chips through third countries.

Such claims could lead to tighter enforcement and additional export restrictions.

For Nvidia, this creates a difficult balancing act.

China represents an important technology market, but increasingly strict U.S. controls could limit access to some of the company’s most advanced products.

At the same time, allegations surrounding the movement of restricted chips could increase regulatory scrutiny of Nvidia’s global distribution network.

Nvidia’s Next Test Is More Than Technology

Nvidia continues to lead the AI semiconductor market, and its next-generation platforms are expected to deliver major improvements in computing performance.

However, technological leadership alone may no longer be enough to sustain the stock’s previous valuation expansion.

Investors increasingly want proof that every new generation of hardware can translate into stronger revenue, sustainable margins and attractive returns for customers.

With Nvidia stock back below $200, the market appears to be demanding more evidence that the AI boom can justify the enormous capital commitments being made across the industry.

Until that confidence returns, Nvidia could remain vulnerable to further volatility as investors reassess AI spending, Chinese competition, financing risks and the increasingly demanding expectations embedded in the stock price.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.