Nvidia Shares Continue to Decline Amid Chip Supply Comments

Investing.com -- Nvidia's stock has fallen 15% from its all-time high, which includes a 2% drop in pre-market trading on Tuesday. This downward trend is associated with comments made by major customer Microsoft (NASDAQ:MSFT) regarding its chip supply situation.
Microsoft CEO Satya Nadella addressed the company's supply conditions in a podcast on Friday. Nadella stated, "I'm strong, yes. I'm not constrained in chip supply. We were definitely constrained in '24. What we are telling the market is why we are optimistic about the first half of '25."
This statement indicates that Microsoft is no longer facing chip supply constraints, a situation that had posed a problem for the company in 2024. The company’s outlook for the first half of 2025 appears optimistic due to changes in these conditions.
Microsoft's outlook contrasts with the position of AI chip supplier Nvidia. Nvidia had previously indicated that it expects demand for Blackwell chips to outstrip supply for several quarters into 2025. Nvidia's projection suggests that despite Microsoft indicating a reduced need for chip supply from one of its largest customers, strong demand for its products will continue.