Nvidia (NVDA) Rival Huawei Is Struggling to Win Over Customers despite Export Rules
Nvidia (NVDA) CEO Jensen Huang has repeatedly warned about the growing competition from China's Huawei in the AI chip market. But so far, Huawei is struggling to convince China's biggest tech companies to adopt its chips, according to The Information. Indeed, although ByteDance, Alibaba (BABA), and Tencent (TCEHY) are testing Huawei's chips, they haven't placed any large orders yet. This is because the firms still prefer Nvidia's products, despite U.S. export restrictions. While Huawei has sold chips to state-owned companies and local governments, it has yet to make major gains with top private tech firms.
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One major reason why big Chinese tech firms are hesitant to make the switch is that their data centers and engineering teams are built around Nvidia's CUDA software. Moving to Huawei's ecosystem would require rewriting code, retraining staff, and losing access to tools that have been developed over the past 15 years. Testing has also revealed some problems: Huawei's latest AI chip, the Ascend 910C, often overheats, and its Compute Architecture for Neural Networks software lacks many of CUDA's features.
Additionally, Chinese tech firms compete with Huawei in cloud computing, which makes them more cautious about adopting a rival's hardware. It also doesn't help that U.S. warnings about penalties for using Huawei's advanced AI chips have added further risk. In fact, after one such warning, a Chinese data center canceled a planned order of Huawei chips. Nevertheless, Huang continues to monitor Huawei's progress closely.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 35 Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $172.36 per share implies 21% upside potential.
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