Why Nvidia stock is down around 2.5% on Thursday

Nvidia stock NVDA fell 2.5% on Thursday, tracking a broader decline in semiconductor stocks, even as the company announced new artificial intelligence partnerships and products aimed at expanding its presence in Japan.

The stock traded at $207.27 in midday trading, broadly in line with the wider chip sector.

The PHLX Semiconductor Index was also down 2.5%.

The announcements come as investors continue to question the sustainability of Big Tech spending on AI infrastructure, prompting Nvidia to broaden its customer base beyond its largest US cloud computing clients.

Nvidia to supply chips for Japanese AI alliance

Nvidia said it will provide AI chips and computing infrastructure for foundational AI models to Noetra, a government-backed Japanese AI initiative backed by companies including SoftBank, Sony, and Honda.

Under the initial deployment, Noetra will install 13,750 Nvidia Vera central processing units and 27,500 Nvidia Rubin graphics processing units, providing 140 megawatts of data center capacity.

The companies did not disclose the financial terms of the agreement.

While the deployment is modest compared with the hundreds of thousands of chips Nvidia sells to its largest US customers, the company has identified sovereign AI as a growing business.

Nvidia said revenue from sovereign AI—government-backed efforts to develop independent artificial intelligence capabilities—more than tripled year over year to more than $30 billion in fiscal 2026.

The company said it expects further growth from the segment.

Company expands physical AI initiatives

Separately, Nvidia announced collaborations with several Japanese companies focused on physical AI, which encompasses robotics, autonomous driving, and other real-world AI applications.

The company introduced two new supercomputing modules, the T3000 and T2000, based on its Thor computing architecture.

Nvidia said the modules are designed to support mass-market robotics.

On Wednesday, Nvidia also unveiled Cosmos 3 Edge, a new artificial intelligence model for robots and vision AI agents.

According to the company, Cosmos 3 Edge is a world model designed to help AI systems perceive and navigate physical environments in real time.

Nvidia said world models can learn from a broader range of inputs than large language models. The launch follows the introduction of Cosmos 3 in May.

Japan expansion takes center stage

The announcements coincide with Chief Executive Jensen Huang's two-day visit to Japan, where Nvidia is expanding its physical AI ecosystem.

According to the company, Fujitsu, Hitachi, and Kawasaki Heavy Industries intend to join a coalition aimed at advancing physical AI technologies in Japan.

“The next frontier of AI is in the physical world, and this is a once-in-a-generation opportunity for Japan,” Huang said in a Wednesday statement. “Japan invented modern manufacturing. Now, it has the opportunity to reinvent it for the age of intelligent industries.”

Nvidia's latest initiatives build on broader investment in Japan's AI ecosystem.

The company's partnerships come months after Microsoft announced a $10 billion investment in Japan to expand AI infrastructure and strengthen cybersecurity.

SoftBank has also increased its investments in artificial intelligence and is seeking to partner with Microsoft and Sakura Internet to advance AI development in the country.

According to the International Trade Administration, Japan's artificial intelligence market is expected to reach $27.9 billion by 2029.

The agency attributed the projected growth to the Japanese government's efforts to promote AI adoption across industries and the willingness of domestic companies to pursue international partnerships.