Citi Downgrades Nvidia to $210 Amid Rising Chip Competition

Citi analyst Atif Malik downgraded Nvidia's stock from $220 to $210 due to increasing competition in the AI chip market, citing Broadcom and Google's strong performance. Malik predicts Nvidia's 2026 GPU sales will be 4% lower than estimated due to competition from Broadcom and Google's TPUs.

Title: Shifting AI Chip Landscape: Citi Analyst Downgrades Nvidia Amid Growing Competition

The artificial intelligence (AI) chip market is undergoing a significant transformation, with top funds reallocating capital away from Nvidia (NVDA) towards Broadcom (AVGO), Google (GOOGL), and Palantir (PLTR). Citing increasing competition from these companies, Citi analyst Atif Malik recently downgraded Nvidia's stock from $220 to $210, forecasting a 4% decline in 2026 GPU sales due to competition from Broadcom and Google's Tensor Processing Units (TPUs).

Broadcom's Ascendancy

Broadcom's AI revenue surged 63% year-over-year to $5.2 billion in Q3 2025, driven by its custom silicon tailored for hyperscalers like Google and Meta [1]. The company’s XPUs—Application-Specific Integrated Circuits (ASICs)—are designed for specific workloads, offering higher efficiency and cost-effectiveness compared to Nvidia’s general-purpose GPUs [2]. For instance, Broadcom’s Tomahawk Ultra Ethernet switch, with 102.4 Tbps capacity, enables low-latency connectivity for AI clusters, addressing a critical bottleneck in large-scale deployments [3]. Financially, Broadcom’s AI business is on track to generate $20 billion annually, positioning it as the second-largest player behind Nvidia’s $60+ billion run rate [4].

Google's Efficiency Edge

Google’s Tensor Processing Units (TPUs) continue to outperform in power and cost efficiency. The latest TPU v5p delivers up to 460 petaFLOPS per pod, with near-linear scaling on models like GPT-3 175b [6]. This makes TPUs ideal for Google’s cloud-based AI workloads, where energy consumption and total cost of ownership (TCO) are critical. In contrast, Nvidia’s H100/H200 GPUs, while dominant in raw FLOPS (141 teraflops FP8 for the H200), face scrutiny over power efficiency, particularly in the Blackwell architecture [7].

Palantir's Software Dominance

Palantir isn’t in the chip business, but its AI-driven analytics platforms are reshaping fund allocations. The company’s $795 million DoD contract extension and a potential $10 billion Army deal highlight its dominance in defense and government AI [8]. Its Gotham and Foundry platforms integrate generative AI to automate decision-making, making it indispensable for agencies handling vast data sets.

Nvidia's Challenges

Nvidia’s Q4 FY2024 revenue hit $35.1 billion, but its stock recently fell below the 50-day moving average, signaling short-term jitters [10]. Competitors like AMD and Broadcom are closing the gap: AMD’s MI300X, for example, matches Nvidia’s H200 in some inference benchmarks [11]. Regulatory hurdles, particularly in China, further complicate Nvidia’s growth trajectory. Yet, Nvidia’s CUDA ecosystem and Blackwell’s 2.2x performance leap in MLPerf Training 4.0 keep it ahead [12].

Investor Implications

The AI chip landscape is diversifying. Broadcom’s custom ASICs, Google’s efficient TPUs, and Palantir’s software-first approach are challenging Nvidia’s hegemony. For funds, this means spreading bets: Broadcom for hardware innovation, Google for cloud-integrated efficiency, and Palantir for government AI dominance. However, Nvidia’s ecosystem and R&D pipeline remain formidable. Investors should monitor technical benchmarks (e.g., MLPerf results) and regulatory developments, particularly in China. The key is balancing exposure to both the “old guard” and the “new wave.”

References

[1] Cloud Stocks: Broadcom Chipping Away at NVIDIA's Market [https://www.sramanamitra.com/2025/09/05/cloud-stocks-broadcom-chipping-away-at-nvidias-market/]
[2] NVIDIA vs. Broadcom: Which AI Semiconductor Stock Offers [https://finance.yahoo.com/news/nvidia-vs-broadcom-ai-semiconductor-120800357.html]
[3] Broadcom (AVGO) Thrives In Custom AI Explosion [https://www.barchart.com/story/news/34545182/broadcom-avgo-thrives-in-custom-ai-explosion]
[4] Tech Advances as Broadcom Gains at Nvidia's Expense [https://www.morningstar.com/news/dow-jones/202509058369/tech-advances-as-broadcom-gains-at-nvidias-expense-tech-roundup]
[5] Nvidia's Blackwell GPUs Struggle with Overheating in Data Centers [https://winbuzzer.com/2024/11/18/nvidias-blackwell-gpus-struggle-with-overheating-in-data-centers-xcxwbn/]
[6] GPU and TPU Comparative Analysis Report | by ByteBridge [https://bytebridge.medium.com/gpu-and-tpu-comparative-analysis-report-a5268e4f0d2a]
[7] GPU and TPU Comparative Analysis Report | by ByteBridge [https://bytebridge.medium.com/gpu-and-tpu-comparative-analysis-report-a5268e4f0d2a]
[8] 2 Artificial Intelligence (AI) Stocks the U.S. Government Is Actively Backing in 2025 [https://www.aol.com/2-artificial-intelligence-ai-stocks-220000990.html]
[9] AI stocks to watch: Nvidia Stock, Broadcom Stock, PLTR ... [https://www.markets.com/analysis/ai-stocks-to-watch-nvidia-stock-broadcom-stock-pltr-stock-amd-stock-1]
[10] Nvidia Stock Plunges Below Key Level As AI Rival Hits All- ... [https://www.investors.com/research/nvidia-stock-buy-or-sell-now-after-earnings-report-china-chip/]
[11] The First AI Benchmarks Pitting AMD Against Nvidia [https://www.nextplatform.com/2024/09/03/the-first-ai-benchmarks-pitting-amd-against-nvidia/]
[12] MLPerf Training 4.0 - Nvidia Still King; Power and LLM [https://www.hpcwire.com/2024/06/12/mlperf-training-4-0-nvidia-still-king-power-and-llm-fine-tuning-added/]