Nvidia Stock Keeps Dropping. What’s Concerning the Market.
Nvidia stock was dropping early on Monday, with optimism around the artificial-intelligence boom seemingly on the wane.
Nvidia shares were down 1.5% at $121.83 in premarket trading. The chip maker’s stock closed down 0.4% on Friday.
Nvidia’s shares rose 37% in the second quarter but are down from a recent intraday peak of more than $140. The downbeat reaction to results from memory-chip maker Micron Technology has underlined the high bar facing stocks which have benefited from the wave of spending on AI technology.
Nvidia shares have risen 150% this year to date through to Friday’s close. That compares with a 14% rise in the S&P 500 index and a 18% rise in the Nasdaq Composite Index over the same period.
There’s no real concern about Nvidia’s dominant position in providing graphics-processing units (GPUs) for powering AI technology, despite competition as various AI chips enter the market. Nvidia is expected to keep its lead with the pending arrival of its next-generation of Blackwell hardware, in configurations such as its NVL72 liquid-cooled rack system, which contains 36 of its GB200 chips.
Blackwell chips which are expected to start shipping in volume in the second half of this year. Nvidia CEO Jensen Huang has said Blackwell GPUs cost $30,000 to $40,000 apiece and he expects “a lot” of revenue from the hardware this year.
However, the launch of the Blackwell chips will test the ability of Nvidia’s suppliers and customers to deal with the infrastructure challenges associated with even more powerful chips.
“There could be additional constraints outside of GPU supply chain including engineering head count to be able to install/service Nvidia’s own NVL36/72 servers as there is only a limited pool of experienced manpower,” wrote Mizuho Securities analyst Vijay Rakesh in a research note.
Rakesh has an Outperform rating and $127.50 price target on Nvidia stock.
Among other chip makers, Advanced Micro Devices was down 0.1% and Intel was rising 0.1% in premarket trading. Super Micro Computer has risen 0.8%.
Write to Adam Clark at [email protected]