Nvidia Stock Turns Positive. What’s Concerning the Market.

Nvidia stock was rising on Monday afternoon, reversing its earlier drop, but signs of optimism around the artificial-intelligence boom are seemingly on the wane.

Nvidia shares were climbing nearly 0.8% at $124.50 just after 3 p.m. ET on Monday, reversing course after 2 p.m. after being down 2.4% in morning 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 that have benefited from the wave of spending on AI technology.

Nvidia shares have risen 151% this year to date through to Friday’s close. That compares with a 14% rise in the S&P 500 index and a 19% 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 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 that 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 4.2%, while Intel fell 0.2% in morning trading. Server maker Super Micro Computer was down 3.8%.

Write to Adam Clark at [email protected]