NVDA, Chip Stocks Extend Rout: Analysts Say OpenAI Deal Fears Overblown

• Shares of Intel and Advanced Micro Devices were down over 3%.
• Reports on the weekend said Nvidia was in talks to provide a roughly $250 billion backstop for OpenAI as part of a massive data-center project. 
• Stocktwits sentiment was ‘neutral’ for Nvidia, ‘bullish’ for AMD, and ‘extremely bullish’ for INTC.

Nvidia stock slipped 1% in premarket trading on Tuesday as a broader selloff in chip stocks extended into a second day.

Shares of Intel and Advanced Micro Devices were down over 3%, pushing the chip sector benchmark iShares Semiconductor ETF down 2.4%. Chip and chip-adjacent stocks were hammered on Monday, with Nvidia losing about $250 billion in market capitalization in a single day.

Several headlines converged to drag sentiment lower. Nvidia faced renewed scrutiny over the nature of its AI investment strategy, with critics arguing that its practice of investing heavily in AI companies that in turn buy Nvidia chips creates circular dependencies that add risk to the broader AI ecosystem.

Reports on the weekend said Nvidia was in talks to provide a roughly $250 billion backstop for OpenAI as part of a massive data-center project. 

Meanwhile, China appears to be growing in strength. New AI models such as Moonshot AI’s Kimi K3 and those from DeepSeek are said to be nearly on par with frontier U.S. models but at a fraction of their cost. 

Another widely watched catalyst was ChangXin Memory Technologies' debut on the Shanghai Stock Exchange. China's largest memory chip maker soared nearly 470% on its first day, making it the most valuable listed company in mainland China.

Analyst Says OpenAI Deal Fears Overblown

On Monday, Morningstar analysts said that concerns around the speculated OpenAI deal were overblown.

“We continue to believe that investors should properly be aware of such deals, but we don't view the report as a sign that AI demand is a mirage. AI token usage continues to rise exponentially, while AI hosting companies appear to be computing constrained,” they said in a report.

Given the high likelihood of strong AI capital expenditures in the near term and medium term (and likely the long term too), we believe Nvidia's growth prospects are underrated. 

“Our understanding is that Nvidia is providing backstops to some neoclouds, enabling them to receive better financing terms for buildouts in exchange for sharing some of their AI hosting revenue with Nvidia… A similar OpenAI deal would be much larger and more prominent, but in our view, is squarely in line with Nvidia's broader strategy of seeding and developing the AI ecosystem for all players,” according to Morningstar.

Retail View On Chip Stocks

On Stocktwits, the retail sentiment was ‘neutral’ for NVDA, ‘bullish’ for AMD, and ‘extremely bullish’ for INTC.

“$AMD $NVDA $INTC $MU Well the whole TAM bs doesnt even matter, the reality is these companies are building these data centres, and computers are all that will matter in the end,” a trader wrote.

Another said: “$NVDA $QQQ  speculative news of potential funding OpenAI datacenter by Wallstreet news caused damage, unbelievable.”

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