NVIDIA (NVDA) Valuation and Competitive Position Amid Google TPU Adoption

On November 28, 2025 (EST), a Reddit discussion analyzed NVIDIA’s investment case amid competition from Google’s Tensor Processing Units (TPUs). Key arguments included:

• Bullish
  : NVIDIA’s ecosystem lead makes TPU replacement impractical; Blackwell/Rubin chips are 300% faster than TPUs and more cost-effective (58 Blackwell chips deliver equivalent performance to TPUs for $180M vs ongoing TPU costs).
• Bearish
  : NVIDIA’s ~50x P/E ratio is overvalued for a mature company; competition from TPUs could reduce margins from 80% to 30%; TPUs are 2x more power-efficient (Ironwood generation).
• Neutral
  : AMD is an alternative due to its early growth cycle [Event Content].

NVIDIA’s stock has declined 13% in the past month (to $176.51 as of November 30, 2025) amid growing competition concerns [1]. Google’s Ironwood TPUs are gaining traction: Meta is in talks to spend billions on Google’s AI chips, following Anthropic’s 1M-chip order [3-4]. Despite this, NVIDIA retains 80-90% of the AI GPU market due to its CUDA ecosystem and Blackwell chips [3-0]. The Technology sector (NVIDIA’s core) is up 0.53% on November 30, outperforming Healthcare but lagging Energy [4].

• Valuation
  : Current P/E ratio of 43.29x (lower than the ~50x cited in the event, likely due to recent stock declines) [1].
• Margins
  : Net profit margin of 53.01% (high but below the 80% mentioned in the event; gross margins may differ) [1].
• Performance
  : 1-month decline of -13%, 1-year gain of +27.32% [1].
• Analyst Consensus
  : 73.4% Buy ratings, consensus target of $250 (+41.6% upside from current price) [1].
• Market Share
  : 80-90% of AI GPU market [3-0].

1. Performance/Cost Verification
   : Need independent data on Blackwell/Rubin vs Ironwood TPU performance and cost-effectiveness (the event claims Blackwell is 300% faster, but Google emphasizes efficiency [3-0]).
2. Meta Deal Impact
   : Size of Meta’s potential Google chip order and its effect on NVIDIA’s revenue.
3. Long-Term Margin Trends
   : Whether competition will reduce NVIDIA’s margins from current 53% to the 30% cited in the event.

• Bull Case
  : Strong analyst support, dominant market share, and ecosystem lock-in (CUDA) mitigate competition risks [1][3-0].
• Bear Case
  : Short-term stock declines, growing TPU adoption (Meta/Anthropic deals), and potential margin compression [3-4][Event Content].

1. Competition Risk
   : Google’s TPUs and AMD’s Instinct chips could erode NVIDIA’s market share and margins. Users should monitor Meta’s final deal with Google and AMD’s design wins [3-4][2].
2. Valuation Risk
   : While P/E has dropped to 43x, it remains high for a semiconductor company. Further stock declines may occur if growth slows [1].
3. Margin Risk
   : NVIDIA’s current 53% net margin is vulnerable to price competition. Investors should track margin trends in upcoming earnings reports [1].

• NVIDIA’s quarterly earnings (margin and revenue growth).
• Market share data for AI chips (especially vs Google/AMD).
• Adoption of Blackwell chips by cloud providers.
• Meta’s final decision on Google TPUs.