Finance

Nvidia Stock: Can AI Dominance Endure Amidst China Headwinds and Rising Competition?

Nvidia‘s stock faces scrutiny after a massive rally, with analysts debating growth amid competition and geopolitical risks.

byAndres Castro

October 19, 2025, 10:21 AM

The Nvidia website viewed through a magnifying glass against a backdrop of stock market data. By DennisF / Shutterstock.com.

Executive Summary

Nvidia maintains a dominant market share in AI GPUs and its proprietary CUDA platform, positioning it as an essential infrastructure provider for the rapidly growing AI market, with analysts projecting significant future revenue and EPS growth.

The company faces substantial headwinds from U.S. export bans to China, a key market that previously accounted for 13-17% of revenue, and increasing competition from AMD as major customers diversify their chip suppliers.

Despite its current high valuation following a 1,230% surge over five years, analysts view Nvidia as reasonably valued based on future growth projections, though potential stricter government regulations on AI remain a broader concern.

The Story So Far

Nvidia’s stock performance is under intense scrutiny despite its dominant position, holding over 90% of the discrete GPU market for AI and benefiting from its proprietary CUDA platform, making it a critical infrastructure provider for the booming AI industry. However, its future growth is challenged by escalating U.S. and Chinese trade restrictions that have significantly curtailed its sales to China, a major revenue source, and by increasing competition as key customers like Oracle and OpenAI begin diversifying their chip suppliers to reduce reliance and costs.

Why This Matters

Nvidia’s future growth, despite its dominant position as a critical infrastructure provider for the expanding AI market, faces significant headwinds from escalating geopolitical tensions, particularly U.S.-China trade restrictions that are directly impacting a key revenue stream. Simultaneously, major customers are diversifying their chip suppliers, potentially eroding Nvidia’s market share, while broader regulatory scrutiny on AI development could temper overall demand for high-performance GPUs, influencing the company’s long-term trajectory.

Who Thinks What?

Proponents of Nvidia’s stock argue that its growth trajectory can continue, citing its essential infrastructure for the expanding AI sector, dominant market position (over 90% of the discrete GPU market), proprietary CUDA platform, superior Blackwell chips, and strategic partnerships with major cloud providers, making its stock appear reasonably valued based on projected revenue and EPS growth.

Critics of Nvidia’s stock highlight several potential headwinds, including exposure to international trade conflicts (U.S. and China bans reducing sales to China), increasing competition from AMD (with customers like Oracle and OpenAI diversifying suppliers), and the potential for stricter government regulations on AI combined with an economic slowdown, which could reduce GPU purchases.

Analyst Leo Sun suggests that while Nvidia may not replicate its extraordinary past gains, the company is still experiencing substantial growth and appears reasonably valued relative to its long-term potential, concluding that it remains a worthwhile investment despite competitive and regulatory challenges.

Nvidia, a leading producer of discrete GPUs for data centers and a bellwether of the artificial intelligence (AI) market, is facing scrutiny regarding its future stock performance following a rally that saw its shares surge approximately 1,230% over the past five years. As of October 17, 2025, the company holds a market capitalization of $4.5 trillion with its stock priced at $183.38, fueling investor debate over whether its growth trajectory can continue despite its current valuation and emerging geopolitical and competitive challenges.

The Bull Case for Nvidia

Proponents of Nvidia’s stock argue that the company continues to provide essential infrastructure for the expanding AI sector, often likened to selling the “picks and shovels” during a gold rush. Grand View Research forecasts the global AI market to grow at a compound annual growth rate (CAGR) of 31.5% from 2025 to 2035, driven by the continuous development of new AI products and services.

Nvidia maintains a dominant position in the discrete GPU market, controlling over 90% according to JPR, with its AI GPUs recognized as industry leaders. This dominance is further strengthened by its proprietary CUDA (Compute Unified Device Architecture) programming platform. This platform optimizes AI applications for Nvidia’s GPUs, creating a significant barrier for competitors.

While AMD’s cheaper Instinct MI300X GPUs offer some competition in the data center market, Nvidia’s top-tier Blackwell chips are noted for superior performance in most large-scale AI and high-performance computing workloads. The company also secures its market position through strategic partnerships with major cloud providers like Amazon Web Services (AWS), Microsoft Azure, and Alphabet’s Google Cloud.

Analysts project Nvidia’s revenue and earnings per share (EPS) to both grow at a CAGR of 36% from fiscal 2025 to fiscal 2028. Based on these projections, its stock at $183 appears reasonably valued at 30 times next year’s earnings, according to the analysis.

The Bear Case Against Nvidia

Critics of Nvidia’s stock highlight several potential headwinds, including the company’s exposure to international trade conflicts and increasing competition. U.S. regulators first blocked Nvidia from shipping its A800 and H800 data center GPUs to China in late 2023, expanding the ban to include its less powerful H20 variant chips in August. China’s regulators subsequently barred its own companies from purchasing Nvidia’s chips in September, which is expected to significantly reduce sales to China, a market that accounted for 17% and 13% of Nvidia’s revenue in fiscal 2024 and fiscal 2025, respectively.

Furthermore, some of Nvidia’s major customers, including Oracle and OpenAI, have recently entered new AI infrastructure deals with AMD. These agreements suggest a desire among AI companies to diversify their chip suppliers, reduce reliance on Nvidia, and potentially lower long-term expenses with AMD’s more cost-efficient offerings. While AMD remains a distant contender in the AI GPU market, this shift could allow it to gradually erode Nvidia’s market share, mirroring its past challenge to Intel in the x86 CPU market.

A broader concern for the AI market’s growth involves the potential for stricter government regulations. These could encompass issues such as the use of copyrighted materials, the displacement of human workers by AI, and privacy concerns. Such restrictions, combined with a potential economic slowdown, could lead to a reduction in aggressive GPU purchases by large AI companies.

Analyst Outlook

Leo Sun, the author of the analysis, suggests that while Nvidia may not replicate its extraordinary multibagger gains of the past five years, the company is still experiencing substantial growth and appears to be reasonably valued relative to its long-term potential. He advises investors to closely monitor competitive and regulatory challenges, but ultimately concludes that Nvidia’s stock remains a worthwhile investment at its current price levels.