GraniteShares 2x Long NVDA Daily ETF (NVDL) experienced a significant pre-market plunge of 5.01% on Tuesday, reflecting growing concerns about NVIDIA's future growth prospects and increasing competition in the AI chip market. This ETF, which aims to provide twice the daily performance of NVIDIA stock, is responding to a shift in investor sentiment towards the tech giant.

NVIDIA, once the undisputed leader in AI chips, is facing headwinds on multiple fronts. The company's core data center business, which has been its primary growth driver since 2023, is showing signs of slowing down. This slowdown is partly attributed to regulatory challenges in the Chinese market, a key revenue source for NVIDIA. The ongoing China-US tensions and potential restrictions on AI chip exports have created uncertainty around NVIDIA's ability to fully capitalize on the $50 billion Chinese AI chip market opportunity.

Adding to NVIDIA's challenges is the rising competition from Asian tech companies. Chinese giants like Alibaba and Cambricon are making significant strides in AI chip development, potentially eroding NVIDIA's market share. Alibaba recently announced the development of a new generation of AI inference chips compatible with NVIDIA's CUDA ecosystem, aiming to fill the gap left by restrictions on NVIDIA's AI GPUs in China. Meanwhile, Cambricon, a domestic chip leader in China, reported a staggering 4347.82% year-over-year increase in operating revenue for the first half of 2025.

The shift in investor focus towards Asian AI computing sectors is evident in the recent stock market performance. While NVIDIA's stock momentum has slowed, Chinese tech stocks and semiconductor companies in Taiwan, Japan, and South Korea are experiencing a "super bull market rally." This trend reflects growing investor confidence in the Asian tech sector's ability to capitalize on the global AI boom and domestic chip substitution efforts.