Nvidia’s stock declined 4.6% on Tuesday after reports surfaced of a pause in its AI Compute Partnership Program and a potential $12.9 billion acquisition of AI model platform Hugging Face.
The Santa Clara-based chipmaker’s shares closed at $217.55, down $10.43, a 4.57% decline. Earlier in the session, the stock reached an intraday high of $229.26 before pulling back to as low as $217.89. Semiconductor peers including Advanced Micro Devices, Broadcom, and Micron also traded lower.
The Wall Street Journal reported that Nvidia has halted parts of its AI Compute Partnership Program, which was designed to help smaller cloud providers finance Nvidia-powered infrastructure through revenue-sharing agreements. The decision followed objections from potential partners over Nvidia’s demand for greater influence over customer selection, as well as internal concerns about regulatory and antitrust risks associated with the initiative.
Separately, a report indicated that Nvidia has agreed to acquire Hugging Face, an AI model platform, for approximately $12.9 billion. The deal, if confirmed, would represent a significant capital allocation and could contribute to market uncertainty regarding future spending priorities.
Nvidia’s strong financial performance for the second quarter of fiscal 2027, reported on August 26, provided limited support. Revenue surged 106% year-over-year to $96.2 billion, while adjusted earnings per share rose 120% to $2.22. However, the company guided for gross margin compression to approximately 71-72% in the fourth quarter of fiscal 2027 due to rising memory prices.
Macroeconomic factors also weighed on technology stocks. Federal Reserve Chair Kevin Warsh’s hawkish remarks at the Jackson Hole Economic Policy Symposium signaled that inflation remains elevated, raising expectations for a potential interest rate hike. The two-year Treasury yield rose, and the rate-sensitive Nasdaq Composite declined, dragging down high-valuation technology shares.
