The price of Nvidia has bounced from recent lows but still has some risk.
NVDA – Daily Chart
The price of NVDA has bounced to $108.84 but may not have found a low yet. That will depend on upcoming news and quarterly earnings into the year-end.
Nvidia is down from it’s all-time highs, but the stock is still up over 110% for the year, which is the best performer in the S&P 500. The price has been range bound since the all-time highs of June.
A big challenge for the company will be living up to its expectations. In its recent earnings release, the company convinced analysts of further expansion. The chipmaker posted better-than-expected earnings for fiscal Q2 2025, but the shares dropped with markets expecting an even bigger beat.
A risk for Nvidia is a concentration of sales with the company’s top four customers accounting for 50% of Nvidia’s revenues. The other issue is that some of those companies are working on their own custom AI chips. The risk of a recession is also still looming and AI spending from tech majors could be at risk. Tech firms were cutting costs in early 2022 but were able to see a resurgence in profits.
Other risks for the current valuation include an antitrust suit with a company named Xockets. That firm is seeking an injunction against Nvidia which could slow the release of its Blackwell platform.
However, despite some threats, Nvidia may still be able to benefit from future AI spending with cloud firm Oracle being one that can help it to grow.
Oracle operates 162 datacenters which use Nvidia chips but CEO Larry Ellison said that could rise to 2,000. Elon Musk’s start-up xAI has been another big buyer of Nvidia GPUs to build up its Colossus AI training infrastructure.
The “Colossus,” supercomputer aims to become the most powerful AI training system in the world, powering the development of Musk’s AI projects, including the free-speech chatbot, Grok.
After its rapid growth in recent years, Nvidia is likely to be popular with any further correction. Nvidia’s CEO Jensen Huang was set to talk at a Goldman Sachs tech conference on Wednesday and that helped to lift the stock by more than 3%.
