NVIDIA Valuation & TPU Competition Analysis (2025 Reddit Discussion Event)

On 2025-11-28 (EST), a Reddit discussion analyzed whether NVIDIA (NVDA) remains a buy amid competition from Google’s Tensor Processing Units (TPUs). Key arguments included:

• NVIDIA’s ecosystem lead and cost-effectiveness of Blackwell/Rubin chips vs. TPUs
• Concerns over NVDA’s ~50x PE ratio (per discussion) and margin risks from TPU competition
• TPUs’ power efficiency advantage
• AMD as an alternative due to early growth cycle

The discussion highlighted conflicting views on NVDA’s valuation and competitive position in the AI chip market [Event Source: Reddit Discussion, 2025-11-28].

NVDA’s stock price has declined 13% in the past month (to $176.51 as of 2025-11-30), reflecting market concerns over TPU competition [0]. The stock closed down 2.08% on 2025-11-30 [1].

• Competition
  : Google’s TPUv7 Ironwood offers a ~44% lower total cost of ownership (TCO) than NVIDIA’s GB200 server for full 3D Torus configurations, posing a threat to NVDA’s market share in cost-sensitive workloads [3, TechMeme; 4, SemiAnalysis].
• Ecosystem Moat
  : NVDA retains a strong advantage via its CUDA platform, which is widely adopted by AI developers [0].
• Order Backlog
  : NVDA has a $500B backlog for Blackwell/Rubin chips, indicating sustained demand despite competition [5, Investing.com].

Analysts maintain a

consensus with a $250 target price (41.6% upside from current levels) [0].

Metric	Value	Source
PE Ratio	43.29x	[0]
Market Cap	$4.3T	[1]
Q3 2025 Revenue	$57B (+62% YoY)	[0]
Data Center Revenue	$51.2B (+66% YoY)	[0]
Net Profit Margin	53.01%	[0]
Blackwell/Rubin Backlog	$500B	[5, Investing.com]
TPUv7 TCO Advantage	~44% lower than GB200 server	[4, SemiAnalysis]
Analyst Target Upside	41.6%	[0]

• The Reddit discussion’s PE ratio claim (~50x) is slightly overstated—actual PE is 43.29x [0].
• NVDA’s data center segment dominates revenue (88.3% of FY2025 revenue), making it the core driver of growth [0].
• TPUv7’s TCO advantage is significant, but NVDA’s large backlog suggests strong demand for its latest chips [5, Investing.com].

• Directly Impacted
  : NVDA (NASDAQ)
• Related Sectors
  : Semiconductors, AI Infrastructure
• Competitors
  : Google (TPUs), AMD (mentioned in discussion), Broadcom (supplies TPUs to Google)
• Supply Chain
  : NVDA’s upstream suppliers (e.g., TSMC for chip manufacturing) and downstream customers (hyperscalers like AWS, Azure)

1. Workload-Specific Cost-Effectiveness
   : The Reddit discussion claimed Blackwell/Rubin chips are more cost-effective than TPUs, but SemiAnalysis data shows TPUv7 has lower TCO for certain configurations. Further analysis is needed to compare performance across training vs. inference workloads.
2. AMD’s Competitive Position
   : The discussion mentioned AMD as an alternative, but data on AMD’s AI chip market share and growth trajectory is limited in available sources.
3. Margin Impact
   : While NVDA currently has a 53.01% net profit margin [0], the extent to which TPU competition will erode margins remains unclear (Seeking Alpha estimates up to 10% revenue risk, but margin impact is unquantified) [6, Seeking Alpha].

• Geopolitical Risks
  : Underground networks smuggling NVDA chips into China (despite export controls) could lead to regulatory scrutiny [2, Webpronews].
• Long-Term Trends
  : Hyperscalers are investing in custom chips (TPUs, Graviton), which may reduce demand for general-purpose GPUs over time [6, Seeking Alpha].

1. Margin Pressure
   : Google’s TPUv7 TCO advantage could force NVDA to reduce pricing or lose market share in cost-sensitive inference workloads [4, SemiAnalysis].
2. Regulatory Scrutiny
   : Smuggling of NVDA chips into China may result in stricter export controls or fines [2, Webpronews].
3. Custom Chip Competition
   : Hyperscalers’ custom chips (TPUs, AWS Graviton) could displace NVDA’s GPUs in long-term data center builds [6, Seeking Alpha].

• Quarterly data center revenue growth
• Blackwell/Rubin adoption rates
• Gross margin trends
• TPU market share gains
• Regulatory updates on chip exports