TLDR
- Nvidia stock announced £2 billion UK AI start-up investment during Trump’s state visit but shares underperform rivals
- NVDA shares gained just 28% since October 2024 while other AI stocks rose 60%+ in same period
- GPU rental prices dropped from $3 to $2 per hour, raising questions about Nvidia’s pricing power in AI market
- Company pledges additional £11 billion for UK AI factories by 2026 through partnerships with Microsoft and CoreWeave
- Wall Street analysts maintain “Strong Buy” rating with $211.69 average price target representing 20% upside potential
Nvidia stock faces a curious puzzle. The AI chip leader announced major UK investments this week but continues lagging behind rival technology stocks.
The company pledged £2 billion for British AI start-ups during President Trump’s state visit. This forms part of a broader £13 billion commitment to UK artificial intelligence infrastructure.
NVDA shares rose 3% Thursday on the investment news. However, the stock’s longer-term performance tells a different story about investor sentiment.
Stock Performance Lags AI Peers
Nvidia stock has gained just 28% since October 2024. Other AI-related stocks have performed much better over the same timeframe.
Taiwan Semiconductor, Micron Technology, and Seagate have all doubled Nvidia’s returns. Energy and infrastructure companies supporting AI data centers have surged over 60%.
This underperformance surprises many investors given Nvidia’s market dominance. The company maintains roughly 80% market share in AI training chips.
Political headwinds may be affecting stock sentiment. The Trump administration now requires Nvidia to hand over 15% of China AI chip sales to the US government.
Chinese companies also face increased restrictions on purchasing Nvidia products. These regulatory changes could limit the company’s growth in its second-largest market.
GPU Pricing Power Shows Cracks
Data center operators now pay closer to $2 per hour to rent top-end Nvidia chips. This represents a drop from nearly $3 per hour earlier this year.
The company’s new Blackwell processor line offers improved efficiency. However, better performance-per-dollar naturally drives down rental rates in the competitive market.
Some analysts view falling GPU prices as a warning sign. A cooling rental market suggests enterprise customers are becoming more selective about AI computing purchases.
Nvidia’s UK investment targets several market challenges. The company identified limited supercomputing access and constrained venture capital as key barriers for British AI companies.
The investment will focus on hubs including London, Oxford, Cambridge and Manchester. Nvidia is partnering with leading venture capital firms like Accel and Balderton Capital.
Wall Street analysts remain bullish despite recent stock underperformance. Out of 38 analysts covering NVDA stock, 35 recommend buying shares.
The average 12-month price target sits at $211.69, representing roughly 20% upside from current levels. Only one analyst rates the stock as a sell.
Nvidia stock closed Thursday with gains following the UK partnership announcements and continued strength in AI demand fundamentals.
