Nvidia, AMD, Intel Volatile Pre-Market as Alibaba Unveils Zhenwu V900
AI chip stocks waver in pre-market trading after Monday's rally, with Alibaba's new Zhenwu V900 increasing competitive pressure on US semiconductor makers.
Key points
- Alibaba's new Zhenwu V900 chip claims three times the performance of its predecessor, increasing competition for Nvidia in China.
- Intel reports it can meet only half of current CPU demand, driven by rising AI workload requirements beyond GPUs.
- Nvidia and AMD hold Strong Buy ratings with significant upside targets, while Intel faces a Hold rating and implied downside.
Nvidia, AMD, and Intel shares exhibited volatility during Tuesday's pre-market session, reversing some of Monday's broad gains. The Philadelphia Semiconductor Index had surged 4.3% on Monday, but momentum faded as Nvidia and Intel drifted higher from lower opens while AMD slipped approximately 0.5%. This mixed performance reflects a cooling of the recent rally in AI semiconductor equities.
The price action coincides with geopolitical uncertainty and new competitive threats. Oil prices remained under pressure due to renewed Iran-U.S. tensions, while U.S. stock futures stayed mostly flat ahead of a scheduled meeting between President Donald Trump and Chinese President Xi Jinping. The upcoming summit is expected to address trade policies and semiconductor supply chains, creating immediate uncertainty for the sector.
Alibaba Chip Launch Intensifies Competition
Alibaba introduced the Zhenwu V900 AI chip, claiming it delivers three times the performance of its predecessor. This development accelerates China's push for domestic AI technology and directly challenges U.S. chipmakers. Nvidia faces particular pressure, as it already operates under restrictions on advanced AI chip sales in the Chinese market.
CPU Demand Surges Beyond GPUs
Intel CEO Lip-Bu Tan stated the company can currently meet only about half of customer demand for CPUs. This shortage highlights a structural shift where AI workloads are driving significant processor demand beyond the traditional GPU market. The situation is further supported by Meta's Muse AI app, whose early success has raised expectations for increased CPU utilization in running AI agent workloads.
Analyst Consensus Diverges on Outcomes
TipRanks data indicates a split in Wall Street views on the sector's future. Nvidia and AMD maintain Strong Buy consensus ratings, with average analyst price targets implying 42.63% and 4.73% upside potential, respectively. In contrast, Intel holds a Hold rating, with its average target suggesting 3.47% downside risk. These divergent valuations reflect differing expectations regarding each company's exposure to trade policy changes and competitive dynamics.
