NVIDIA Corp. (NASDAQ:NVDA) stock fell more than 1% in Tuesday’s premarket trading as investors pulled back from large-cap technology stocks. Nasdaq futures dropped 1.02%, while S&P 500 futures fell 0.59%.
The broader market weakness came as analysts assessed NVIDIA’s growing push into the custom artificial intelligence chip market. That strategy could open a new growth channel for NVIDIA while increasing competitive pressure on Broadcom.
NVIDIA’s NVHBM Push Threatens Broadcom’s AI Chip Position, Analyst Says
NVIDIA is expanding deeper into the custom artificial intelligence chip market with NVHBM, according to Counterpoint Research analyst Neil Shah.
The technology could challenge Broadcom Inc. (NASDAQ:AVGO) while strengthening NVIDIA’s influence over AI infrastructure.
NVHBM moves the memory controller from the accelerator chip into the base die of a high-bandwidth memory stack. It also replaces the standard JEDEC memory bus with NVIDIA’s proprietary die-to-die connection.
Shah said the approach gives NVIDIA control over the memory controller, interface and link protocol. Memory suppliers would manufacture the base die based on NVIDIA’s design.
NVIDIA Expands Beyond GPUs
The strategy could allow NVIDIA to sell its networking fabric, rack architecture, software and memory subsystem to companies developing custom accelerators. NVIDIA would not need to design the accelerator itself.
Amazon.com Inc.’s (NASDAQ:AMZN) Annapurna Labs is the first disclosed customer. It plans to use NVHBM with its Trainium4 AI chip.
MediaTek also adopted NVIDIA’s NVLink Fusion platform. Shah said this gives NVIDIA another channel for reaching custom chip customers.
However, the analyst questioned some of NVIDIA’s performance claims. The company compared NVHBM with HBM4E, which is not yet shipping, and did not disclose its full testing baseline. Shah said only the claimed 67% reduction in physical interface area can be checked using available pin-count data.
Broadcom Faces New Competition
Shah said NVHBM places NVIDIA directly in a market served by Broadcom and Marvell Technology Inc. (NASDAQ:MRVL).
Broadcom could benefit from wider adoption of custom AI chips. Still, it lacks a comparable base-die offering, according to the analyst.
Marvell outlined a similar architecture in December 2024 and has joined NVLink Fusion. That leaves Broadcom as the only major custom chip design company without a direct NVIDIA partnership, Shah said.
NVIDIA Technical Analysis And Analyst Outlook
NVIDIA remains in a longer-term uptrend despite the early decline. The stock trades 4.5% above its 50-day simple moving average of $208.62. It is also 11.3% above its 200-day SMA of $195.96.
However, NVIDIA trades about 0.3% below its 20-day SMA of $218.75. That level could influence the stock’s near-term direction.
The relative strength index stands at 54.25. This neutral reading suggests the stock is consolidating. It is neither overbought nor oversold.
The moving-average structure remains bullish. The 20-day SMA sits above the 50-day average. Meanwhile, the 50-day SMA remains above the 200-day average.
Key resistance stands near $228. A stronger rally could put the 52-week high of $236.54 back in focus. Support sits near the 200-day SMA, followed by the $190 level.
The stock trades at 27.9 times earnings. That valuation reflects high expectations for continued growth. NVIDIA carries a consensus Buy rating and an average price forecast of $349.15.
Citigroup and Mizuho raised their price forecasts to $315 on Aug. 27. JPMorgan increased its forecast to $320. Citigroup maintained a Buy rating, Mizuho kept an Outperform rating and JPMorgan maintained an Overweight rating.
NVDA Price Action
NVIDIA shares fell 1.35% to $217.80 in Tuesday’s premarket session, according to Benzinga Pro.
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