This Nvidia Challenger Just Issued a Big AI Warning in China. What Should You Do With NVDA Stock Here?

Core Insights - Huawei plans to produce approximately 600,000 of its 910C Ascend chips in 2024, nearly double the expected output for 2023, with total production across all models potentially reaching 1.6 million chips, marking a significant technical advancement for the company [1][6] - The increase in production is aimed at meeting the growing domestic demand in China for AI processors from companies like Alibaba and Tencent, as Huawei seeks to capture a larger share of the semiconductor market amid geopolitical challenges faced by competitors like Nvidia [2][6] Huawei's Production Plans - Huawei's roadmap includes plans to launch a successor to the 910C, known as the 910D, in late 2026, alongside the introduction of the 950DT chip, which will feature a new design with four dies in a single chipset [8] - The company aims to produce around 100,000 units of the 950DT, which represents a significant design change and is part of Huawei's strategy to enhance its competitive position in the semiconductor industry [8] Competitive Landscape - Nvidia currently dominates the global AI chip market, but Huawei's increased production signals a potential shift in the competitive landscape, particularly as Huawei is seen as a key player in China's efforts to reduce reliance on U.S. technology [6][9] - Despite Huawei's advancements, Nvidia's chips are still preferred for training large-scale AI models, while Huawei's chips have primarily been used for inferencing [12] Market Outlook for Nvidia - Nvidia's stock has seen a year-to-date increase of 38%, with analysts maintaining a strong buy consensus, indicating confidence in the company's growth despite challenges in the Chinese market [3][14] - Projections for Nvidia's adjusted EPS suggest a year-over-year increase of 50.58% to $4.50 in fiscal 2026, with revenue expected to rise 58.20% to $206.45 billion [15]