Should Nvidia Worry About AMD’s OpenAI Deal? Retail Traders See ‘Huge Bearish Turning Point’

Nvidia Corp. (NVDA) retail traders turned more pessimistic on the artificial intelligence (AI) chipmaker’s stock after rival Advanced Micro Devices (AMD) announced a strategic partnership with OpenAI for deploying its GPUs.

On Stocktwits, retail sentiment toward Nvidia stock deteriorated to ‘bearish’ as of early Tuesday from the ‘neutral’ mood seen the day before. The message volume on the stream rose 413% over the 24 hours leading up to late Monday.

A bearish watcher expected Nvidia’s stock to drop to $150 soon. It ended Monday’s session down 1.11% at $185.54, although the downside was accompanied by slightly below-average volume. 

Another user said it is a disaster for Nvidia, with the AMD-OpenAI partnership deal and the Jensen Huang-led company’s inability to sell its high-performance AI chips in the key market of China. A third user noted that AMD and Intel are now poised to hurt Nvidia, given the emergence of competition, in addition to its existing China headwinds.

Some also expressed worries concerning Nvidia’s valuation. A user stated that Nvidia is overvalued and also noted that competition is intensifying. Calling OpenAI’s investment in AMD a “huge bearish turning point for Nvidia, the user said, despite Nvidia cornering the market with CUDA software, OpenAI is basically saying that AMD’s ROCm software stack for GPU programming will be adopted. AMD also has the advantage of its offering being open-sourced. “$NVDA is going to get cut in half by this time next year,” they warned.

However, an analyst downplayed the deal's impact on Nvidia. TFI Securities analyst Ming-Chi Kuo said, based on Nvidia’s painful experience with building cabinet-level servers, the process of deploying 1 GW of AMD’s MI450 AI chips is unlikely to be smooth. “Nvidia’s strategy would be to elevate the competitive landscape to another level before AMD’s cabinet-level servers are successfully delivered, securing its future advantage, Kuo said. “As long as the overall AI computing market continues to grow, OpenAI’s collaboration with AMD should have a limited impact on Nvidia.”

OpenAI CEO and co-founder Sam Altman also allayed concerns about loss of business to Nvidia. In an X post, he stated that the AI startup plans to increase its Nvidia purchase over time and that the AMD deal is incremental to its work with Nvidia.

Nvidia’s stock has gained 38.2% for the year-to-date period, while AMD, with Monday’s 23.7% rally, has rallied 69%.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

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