NVIDIA (NVDA) Valuation and TPU Competition: Reddit Discussion Analysis

This analysis is based on a Reddit discussion posted on November 28, 2025 [0], which debated NVIDIA’s (NVDA) valuation and competition from Google’s Tensor Processing Units (TPUs). The OP argued NVDA is undervalued at $180, projecting it to reach $210 by year-end and $260 next year, noting TPUs are specialized for deep learning/LLMs but not “GPU killers” due to NVDA’s broader use cases (training, inference, graphics, scientific computing) and dominant CUDA ecosystem relied on by AI/ML engineers and infrastructure [0].

Key discussion points included:

• Bullish: NVDA’s ecosystem lead (score 14) and cost-effectiveness of Blackwell/Rubin chips (score 1)
• Bearish: PE ratio (~50) being high for a mature company (score 3) and TPU competition reducing margins (score 1)
• Neutral: TPU power efficiency (score 9) and AMD as an alternative (score 2)

Market impact analysis shows NVDA’s stock declined slightly post-discussion, closing at $180.26 on November 28, 2025, and dropping to $176.51 by December 1 (-2.08%) [0], likely due to concerns about a potential Meta-Google TPU deal [2][4]. In the medium term, NVDA is expected to maintain its moat from the CUDA ecosystem, general-purpose GPUs, and robust sales growth [1], though Google’s Ironwood TPU (7th gen), with 2x performance per watt of TPU v5p [3][5], poses a technical challenge if TPU access is broadened. Long-term, the AI chip market will grow, with GPUs and ASICs like TPUs playing complementary roles, while NVDA’s diversified product portfolio (data center, gaming, automotive) provides resilience [0].

1. CUDA Ecosystem Moat Outweighs TPU Technical Advantages
   : NVDA’s CUDA platform, relied on by a vast base of AI/ML developers, remains its primary competitive edge, mitigating concerns about TPU performance or efficiency [1][0].
2. Reddit PE Ratio Claim Inflated
   : The discussion cited a ~50x PE ratio, but actual TTM PE is 43.29x, with a robust 53.01% net profit margin (higher than the 30% feared in the discussion) [0].
3. Analyst Consensus Remains Bullish
   : 73.4% of analysts rate NVDA as a Buy, with a $250 consensus price target (+41.6% from current) [0], despite competition concerns.
4. TPUs Complement, Don’t Replace, GPUs
   : The OP’s argument that TPUs are specialized (not GPU killers) is supported by market dynamics, as GPUs serve broader use cases beyond AI training [0].

1. Increased Competition
   : Google’s TPUs, Amazon’s Trainium, and AMD’s growth could erode NVDA’s market share or pricing power [2][3][4].
2. Supply Chain Vulnerability
   : Reliance on TSMC for manufacturing poses disruption risks [0].
3. Regulatory Tensions
   : US-China tensions could impact ~13% of NVDA’s revenue from Chinese customers [0].
4. Market Sentiment Volatility
   : NVDA’s stock is sensitive to AI-related news, with negative sentiment potentially leading to price swings [0].

1. AI Chip Market Growth
   : The expanding AI market will drive demand for both GPUs and custom chips [0].
2. Product Diversification
   : NVDA’s presence across data center, gaming, and automotive sectors provides revenue resilience [0].
3. R&D Investment
   : High R&D spending (as noted by CEO Jensen Huang) will support continued innovation to counter competition [6].

The Reddit discussion highlighted contrasting views on NVDA’s valuation and TPU competition, with the ecosystem lead as a key bullish factor. Market data shows a short-term price dip, but NVDA maintains a strong moat from its CUDA platform, solid financials (43.29x TTM PE, 53% margin), and bullish analyst consensus. Competition from TPUs and other players remains a risk, but the AI chip market’s growth and NVDA’s diversification provide long-term resilience. Decision-makers should monitor TPU adoption rates, the Meta-Google deal, and NVDA’s R&D strategies for future insights.