Quick overview
- Nvidia’s stock dropped 4.40% amid concerns over AI financing and spending sustainability.
- The company announced a significant capacity expansion with six partners to prepare for increased demand.
- Despite strong revenue growth, rising memory costs and funding constraints pose risks to Nvidia’s margins.
- Analysts remain bullish on Nvidia, with Cantor Fitzgerald reiterating a $350 target, while key support levels are identified around $208 to $210.
Nvidia (NASDAQ: NVDA) dropped 4.40% on Thursday and closed at $212.21. In early trading today, U.S. futures pointed lower after the Nasdaq fell around 2.6% in the same session. Nvidia underperformed the index by 1.8% as investors grew more concerned about how long AI spending can continue at its recent pace and how companies will finance it.
AI Financing & Scarce Capital Fears Hit Chips
Yesterday, the market remained under pressure mainly due to concerns about AI spending and financing costs. Meta shares fell about 7% after its quarterly report, and the Philadelphia Semiconductor Index dropped 6.72%. AMD lost 8.1%. Nvidia’s fall came as investors reassessed the cost of expanding AI infrastructure and the ability of companies to sustain their spending.
In an interview with CNBC, Jensen Huang said neocloud demand is “off the charts,” but the capital needed to fund AI infrastructure is scarce. His comments added to concerns that smaller AI companies could struggle to finance expansion, which could slow future orders for Nvidia’s chips.
Supply Chain Expansion Signals Confidence
On October 21, Nvidia announced a capacity expansion with six partners including Amkor, IBIDEN, King Yuan Electronics, Samsung Electro-Mechanics, SPIL, and Unimicron. The plan aims to lift substrate capacity 2.5x over the next three years and SPIL’s optical-engine capacity about 15x by mid-2027. It shows suppliers are preparing for more demand, but actual orders will depend on how much AI infrastructure companies build.
GTC Berlin Pushes Sovereign AI
At GTC Berlin, Huang urged Europe to build more AI data centers. In June, Nvidia also entered a $10 Billion initiative with Kazakhstan aiming to build a 100,000-GPU cluster. This adds more demand for AI infrastructure outside the U.S.
Earnings Power Still Outruns the Price
Nvidia reported $96.2 Billion in fiscal Q2 revenue, up 106% from a year earlier. Data center sales accounted for $89 Billion of the total. For the next quarter, the company expects revenue of $108 Billion, plus or minus 2%, assuming no data center compute revenue from China.
According to CFO Colette Kress, fiscal 2028 revenue could grow about 70%. However, rising memory costs are weighing on margins, with Q3 gross margin guided at about 74%. Nvidia’s board has also authorized an additional $150 Billion in share buybacks, bringing the total remaining authorization to $235 Billion.
Analyst Targets and What to Watch Next
Wall Street is still bullish on Nvidia. Cantor Fitzgerald reiterated its Overweight rating with a $350 price target and named Nvidia a top pick.
On the technical front, first and second support sit in the $208 to $210 range. Any break below this range could bring the $200 level into focus. On the upside, first resistance starts at $218.88, followed by the second resistance at $221.97 level. The next major resistance for bulls is $243.37.
Nvidia hasn’t confirmed its next earnings date yet. Until then, AI financing concerns and spending updates from major cloud providers could drive NVDA stock.
Today’s FXLeaders Live Session
Today’s FXLeaders live session covers gold, oil and the US dollar ahead of central bank week, with the key levels to watch.
FAQs
Why did Nvidia stock fall on Thursday?
Nvidia shares fell 4.40% as investors grew more concerned about AI financing costs and whether smaller AI companies can sustain their infrastructure spending. Overall tech sector weakness also added pressure.
What is the Nvidia stock price target?
Wall Street remains bullish. Cantor Fitzgerald reiterated its Overweight rating with a $350 price target.
Bottom Line
Nvidia fell 4.40% as concerns about AI financing pressured chip stocks. Revenue growth, supplier expansion, and continued investment in AI infrastructure support the outlook, but funding constraints and rising memory costs remain risks. The $208 to $210 range is the next key support zone, while the upcoming earnings report could set the direction for NVDA stock. Investors should also watch spending updates from major cloud providers to assess whether AI demand can sustain its current pace.
Arslan Ali Butt
Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)
Arslan Ali Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.
His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.
His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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