Is the NVIDIA Stock at Risk as Anthropic Weighs Building its Chips?

Key Insights

• NVIDIA stock has risen by double digits in the past few days.
• Anthropic is planning to launch its own chips as the prices of NVIDIA GPUs rise.
• The stock has formed a bullish flag, pointing to more gains this year.

NVIDIA stock price has done well in the past few days, reaching its highest point since March 13. Bitcoin’s rebound may continue in the near term. It has formed a bullish flag pattern on the three‑day chart, even as Anthropic prepares to launch new chips.

Anthropic is Working on New Chips, Joining Other Large Companies

NVIDIA faces a major risk as more companies develop their own chips. This growing competition could undercut its dominance in the future.

Reuters reported that Anthropic is considering designing its own chips. Rising costs of buying from NVIDIA and AMD are driving this move.

Other companies are considering working on their ASIC chips, with most of them being in advanced stages. The most notable ones are companies like Amazon, Microsoft, Google, and OpenAI. OpenAI has made a deal with Broadcom, which will manufacture its chips.

History shows that these companies can disrupt other firms by building application-specific chips. For example, Apple dumped Intel and launched its own chips, which have become highly successful. Microsoft and Amazon already design some of their chips.

The growth in the ASIX chip industry explains why NVIDIA recently invested in Marvell Technology. It’s a top company that builds chips for third-party customers.

A successful launch of these chips would be a major setback for NVIDIA because of how concentrated its customer base is. It is estimated that Microsoft accounts for 20% of NVIDIA’s sales. As such, moving away from NVIDIA would have a major impact on its business.

Still, on the positive side, NVIDIA is in a pole position in the GPU industry. There, it has been building these products for many years.

As such, it may continue doing well for a while as the chips catch up. Amazon has struck a multi‑billion‑dollar deal with NVIDIA. This comes even though Amazon is expected to launch its own chips in the next few years.

Top Tech Earnings Ahead

The next important catalyst for the NVIDIA stock price will be the upcoming earnings season, which will start next week.

Taiwan Semiconductor, a company that manufactures NVIDIA chips, will publish its numbers next week. Similarly, ASML, which makes lithography equipment used to make chips, will also release its numbers next week.

After that, top technology companies like Microsoft, Google, Amazon, and Meta Platforms, will release their results later this month.

These numbers will provide more hints about their capital expenditure and what to expect later this year. Signs that they expect to keep growing their spending will be a good thing for NVIDIA.

NVIDIA will release its numbers in May. NVIDIA’s valuation has dropped sharply in recent weeks. Its average price‑to‑earnings ratio now stands at 20, the lowest level in years.

Meanwhile, NVIDIA shares will do well if the ceasefire between the US and Iran holds. The war’s main impact on semiconductor companies has been on helium, which mostly comes from the Middle East.

NVDA Stock Price Technical Analysis

NVDA’s daily chart shows a rebound. The NVIDIA stock price climbed from a low of $165 earlier this month to $183 now. It has jumped by 113% from its lowest level last year.

On the positive side, the stock has remained above the 50-day moving average, a sign that bulls have prevailed.

The most important technical is that it has formed a bullish flag pattern. It has already completed the flagpole section and is now in the flag section, which is characterized by a falling channel.

As such, the stock will likely keep rising as investors target the upper side of the falling channel. A move above that level will point to more gains towards its all-time high of $212.

A drop below the lower side of the flag channel will point to more downside, potentially to the psychological level at $150.

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