Nvidia gets a price target cut from Citi as competition in AI arena grows

Citi analyst Atif Malik trimmed Nvidia's price target to $210, while maintaining a Buy rating, citing increasing competitive threats to its AI chip dominance from Broadcom's custom AI chips (XPUs) and Google's Tensor Processing Units (TPUs). This growing competition, highlighted by Broadcom's recent $10 billion XPU order, is projected to reduce Nvidia's 2026 GPU sales by an estimated $12 billion, or approximately 4%, as Google's strategy to offer compute capacity to Nvidia's rivals intensifies. Despite these concerns and recent share pressure from Q2 data center revenue and customer concentration, Malik's 2025/2026 estimates for Nvidia remain slightly above consensus, driven by neocloud and sovereign AI spending.

Analysis

A Citi analyst has identified intensifying competitive threats to Nvidia's dominance in the AI chip market, prompting a price target reduction to $210 from $220, though a 'Buy' rating is maintained. The primary catalysts for this revised outlook are Broadcom's recent success, including a $10 billion order for its custom AI chips (XPUs), and Google's increasingly competitive Tensor Processing Units (TPUs). This competition is projected to directly impact Nvidia, with the analyst forecasting a ~$12 billion, or 4%, reduction in Nvidia’s 2026 GPU sales. The threat is amplified by Google's strategy of offering compute capacity to Nvidia's rivals such as Meta and Oracle, accelerating the adoption of alternative hardware. This cautious view is compounded by Nvidia's recent performance, including an 8.6% stock decline over the past month, slightly lower-than-expected Q2 data center revenue growth, and a significant customer concentration risk, with its top two clients accounting for 39% of total revenue. Despite these headwinds, the analyst's 2025 and 2026 estimates for Nvidia remain slightly above consensus, buoyed by expected growth in neoclouds and sovereign AI, with potential upside from a resumption of GPU shipments to China not yet factored in. The next major catalyst is CEO Jensen Huang's GTC keynote on October 28.

Key Decisions for Investors

• Investors should closely monitor the adoption rates of Broadcom's XPUs and Google's TPUs, as these are now cited as material threats capable of eroding Nvidia's future market share and impacting 2026 revenue projections by an estimated $12 billion.
• Despite the competitive risks, the analyst's 'Buy' rating and 19.7% implied upside warrant attention; focus should be on the upcoming GTC keynote on October 28 for Nvidia's strategic response and on execution in high-growth areas like sovereign AI.
• Given the high customer concentration risk and recent stock weakness, it may be prudent to review position sizing in NVDA, while the strengthening competitive posture of Broadcom (AVGO) and Google (GOOGL) could present opportunities for portfolio diversification or pair trades within the AI semiconductor space.