Nvidia stock falls below $200: What's next?
Representative image
Nvidia stock (NVDA) has fallen below a level investors have been watching closely, as concerns over the future of AI spending weigh on the chipmaker. Shares dropped below $200 during Thursday's trading after Democratic victories in the US midterm elections raised questions about whether new data center projects could face greater restrictions. Wall Street, however, still sees considerable upside in the stock.NVDA Stock Price Falls TodayNvidia shares fell more than 6% to around $186 in early trading Thursday. If the decline holds, it would be the first time the stock has closed below $200 since July 30, according to Barron's.The concern is that fewer data center projects could eventually mean fewer orders for Nvidia's processors and networking equipment. Companies such as SpaceX and CoreWeave are already facing investor concerns over possible construction delays, putting pressure on shares of businesses closely tied to the AI infrastructure expansion.However, delayed projects do not necessarily mean that spending will disappear. Technology companies could shift construction to other states or overseas. Gavekal US chief economist Will Denyer told Barron's that some states and counties would remain willing to welcome data centers because of the tax revenue they bring.135579574135576908Nvidia Stock Price Today Faces Pressure Despite Strong Revenue GrowthThe latest decline comes at a time when Nvidia's business continues to grow rapidly. The company has forecast 70% revenue growth for fiscal 2028, largely corresponding to calendar 2027, and has indicated that supply constraints, rather than a lack of demand, are limiting its growth.Nvidia generated $96.22 billion in revenue in its latest quarter, up 105.8% from a year earlier. It also recorded its fifth consecutive earnings beat. Its third quarter revenue guidance stands at $108 billion, plus or minus 2%, assuming no data center compute revenue from China.The chipmaker closed Wednesday at $200.13, down 3.17%, after touching an intraday low of $199.68. The decline came even as S&P 500 gained 1.58% and the Nasdaq Composite advanced 1.44%.The stock is now about 16.3% below its October 6 record closing price of $239.24 and trades below its 50-day and 200-day moving averages, according to 24/7 Wall St report.135575113NVDA Stock Could Rebound as Analysts Maintain Bullish TargetsDespite the recent selling, Wall Street analysts remain optimistic about Nvidia. FactSet data cited by Barron's puts the average price target at approximately $333. Meanwhile, 24/7 Wall St. reported a consensus target of $327.14, suggesting roughly 63.5% upside from Wednesday's closing price.Nvidia's next quarterly earnings report, scheduled for November 17, could offer investors a better understanding of whether demand is holding up despite concerns about data center construction.CEO Jensen Huang said during the August earnings call that demand growth was much higher than 70%, but available supply allowed the company to confidently deliver that level of growth.There are still risks. Nvidia has $279 billion in supply commitments and expects fourth-quarter gross margins to bottom between 71% and 72%. If data center construction slows and major technology companies cut their budgets, those commitments could become a burden.135572618135551377
Read the full story at The Economic Times →