Why are Nvidia's shares plummeting today?

The shares of the American semiconductor giant Nvidia (NASDAQ: NVDA) are falling in pre-market trading as investors digest the news that Meta (NASDAQ: META) will opt for Google's chips.

Before the market opens on November 25, Nvidia's shares dropped 3.7%, to $175. At the close of the market on Monday, the stock was valued at $182, a rise of more than 2%.

It is worth noting that Nvidia's shares are falling amid reports that Meta Platforms is exploring the use of customized artificial intelligence chips from Google in its data centers.

According to sources, Meta could start integrating the chips next year, and a wider implementation could be possible by 2027.

The move is seen as a potential challenge to Nvidia's dominance in the AI accelerator and GPU market, a fundamental pillar of the company's valuation and growth narrative.

Investors are concerned that the adoption of Google's TPUs, specialized processors designed for AI tasks, could reduce Nvidia's competitive advantage in the rapidly growing AI data center segment.

Historically, Nvidia's GPUs have been the preferred hardware for training and running large-scale AI models, giving the company significant pricing power and long-term contracts with hyperscale customers.

A shift towards Google's chips could indicate a relaxation of that "lock-in," which could affect Nvidia's projected revenue growth and profit margins.

The pre-market decline also reflects broader caution in the technology sector, where high-valuation AI and semiconductor stocks are under increased scrutiny.