NVIDIA Stock Declines Amid AI Competition Fears, Sector-Wide Retreat

NVIDIA Corporation (NASDAQ: NVDA) shares fell on Friday, caught in a broader semiconductor sell-off fueled by concerns over new AI competition from China and questions about the sustainability of massive infrastructure spending. The decline contributed to a wider market retreat and saw the chipmaker cede its title as the world's most valuable company to Apple.

New Competitive and Capex Pressures

The downturn was driven by several factors, beginning with the unveiling of a new model from Chinese AI startup Moonshot AI. The company announced its Kimi K3, a 2.8-trillion-parameter open-weight system, which it claims narrows the performance gap with leading U.S. AI platforms, according to a report from Investing.com.

This development reportedly sparked comparisons to the "DeepSeek moment of early 2025," an event that challenged the narrative that AI leadership requires continuous, large-scale spending on GPU infrastructure—a thesis central to NVIDIA's valuation. Compounding these worries, key supplier TSMC reported record profit on Thursday but also raised its 2026 capital expenditure guidance, stoking fears of margin compression across the supply chain.

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Broad Semiconductor Sell-Off

The negative sentiment rippled across the entire semiconductor industry. The iShares Semiconductor ETF (SOXX) was on pace for its worst weekly performance in over a year, with peers like AMD, Intel, and Broadcom also declining. A separate report that Alphabet’s Gemini 3.5 Pro model is running months behind schedule added to anxiety about near-term chip demand.

The broader market also retreated amid a rotation away from richly valued AI hardware stocks. In afternoon trading, the S&P 500 was down 0.9%, while the tech-heavy Nasdaq Composite fell 1.2%. Underscoring the shift in sentiment, Apple Inc. overtook NVIDIA to reclaim the world's largest market capitalization for the first time in roughly three months.