- Summary:
- Nvidia stock price faces pressure as the company tackles an overheating crisis. However, a strong order book and cash flow provides a way out
Nvidia stock price returned to winning ways in the premarket session on Thursday as upbeat sentiment returned to the market following Wednesday’s interest rate cut by the Federal Reserve. Nvidia has had a torrid run in the last two weeks, bringing its monthly losses to 7.5%.
The downward momentum was precipitated by concerns over the overheating of its high-end Blackwell GPU chips, whose demand was previously described as “insane” by CEO Jensen Huang. The Fed’s move to slash interest rates by 0.25% was not a company-specific stimulant. However, it resonated well with Nvidia stock investors as it resets the market sentiment after a prolonged period of correction.
What’s the way back up for Nvidia stock price?
Nvidia (NASDAQ: NVDA) is already addressing the overheating problem by redesigning its server racks and collaborating with cloud service providers. The company’s core business remains unperturbed, thanks to a strong order book and cash and cash equivalent (CCE) of $38.4 billion as of October 2024.
NVDA registered successive monthly gains in the last four months, and is up by 161% year-to-date. That has created strong traction that could support a faster reversal of recent losses.
Meanwhile, a Financial Times report released on Wednesday shows that Microsoft bought 485k Hopper series chips from Nvidia, more than twice as much as the second-biggest buyer, Meta’s 224k chips. That has triggered talk that Microsoft’s rivals could increase their order volumes to catch up as competition heats up in the AI race.
Nvidia stock price forecast
Nvidia stock price pivots at $ 129.80 and the buyers are in control as per the momentum indicator. That momentum will likely send the stock higher to encounter initial resistance at $132.70. However, a stronger upward momentum will break above that barrier and could test $134.80.
Conversely, moving below $129.80 will signal the onset of downward momentum. That could see the first support come at $128.15. Breaking below that level will invalidate the upside narrative. Meanwhile, the momentum could extend the decline and test the second support at $126.70.
