NVIDIA (NVDA) Valuation & Competitive Position Analysis Amid Google TPU Competition

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

• Bullish
  : NVDA is undervalued due to its ecosystem lead; Blackwell/Rubin chips are cost-effective vs TPUs.
• Bearish
  : A ~50x P/E ratio is overvalued for a mature company; TPUs could reduce margins significantly.
  The debate centered on whether NVDA remains a buy despite TPU competition.

NVDA’s stock performance reflects investor concerns about valuation and competition:

• Short-Term Trend
  : From October 28 to November 28, 2025, NVDA declined 8.31% (from $193.05 to $177.00) [0]. Over one month, it dropped 12.83% [0].
• Competitive Context
  : Web search results indicate TPUs are a “cost-effective hedge” (not replacement) for NVDA’s GPUs, driven by NVDA’s supply constraints [1]. Hyperscalers like Meta use TPUs to diversify, but this does not signal a shift away from NVDA [1].
• Long-Term Resilience
  : SemiAnalysis noted NVDA’s upcoming Rubin chips will counter TPU advantages, as TPUs have higher Model FLOP Utilization (MFU) but lag in peak performance [2].

• Valuation Metrics
  : NVDA’s current P/E ratio is ~43.69x (lower than Reddit’s 50x claim but still high for semiconductors) [0]. Its value score of 4.08/100 indicates overvaluation on traditional metrics [0].
• Profitability
  : NVDA’s net profit margin of 53.01% is exceptional [0], but competition from TPUs could pressure margins if adoption grows [2].
• Analyst Consensus
  : The average target price is $250 (+41.6% upside from $176.51) [0]. 73.4% of analysts rate NVDA as “Buy” [0].
• Volatility
  : Daily price standard deviation is 2.59% [0], reflecting high sensitivity to competitive news.

• Supply Chain
  : Unclear when Rubin chips will be widely available and if Blackwell supply constraints are easing.
• TPU Adoption
  : No data on the exact percentage of hyperscaler infrastructure using TPUs vs NVDA GPUs.
• AMD’s Position
  : Reddit mentioned AMD as an alternative, but recent market share data for AMD’s AI chips is missing.
• Growth Sustainability
  : Need to verify if NVDA’s data center revenue (88.3% of total) [0] will maintain current growth rates.

• Valuation Risk
  : NVDA’s ~43x P/E ratio is above industry averages. Users should be aware this may lead to a correction if growth slows [0].
• Margin Pressure
  : Competition from TPUs could reduce NVDA’s premium pricing power, impacting its 53% margin [0,2].
• Supply Chain
  : Persistent chip shortages may drive more hyperscalers to TPUs as a hedge [1].
• Competitive Landscape
  : Monitor Google’s TPU rollout and AMD’s market share gains in AI chips.

[0] Ginlix Analytical Database (tools: get_stock_realtime_quote, get_company_overview, get_stock_daily_prices)
[1] Benzinga, “Google TPUs Are ‘Cost-Effective Hedge,’ Not Replacement For Nvidia,” Nov 26,2025. URL: https://www.benzinga.com/markets/equities/25/11/49077878/google-tpus-are-cost-effective-hedge-not-replacement-for-nvidia-strategist-says
[2] SemiAnalysis, “Google TPUv7: The 900lb Gorilla In the Room,” 2025. URL: https://newsletter.semianalysis.com/p/tpuv7-google-takes-a-swing-at-the
[3] Futunn, "SemiAnalysis Provides In-Depth Analysis of TPU—Google,"2025. URL: https://news.futunn.com/en/post/65579252/semianalysis-provides-in-depth-analysis-of-tpu-google-googus-googlus