NVIDIA Stock Price Analysis as OpenAI Issues Concerns About its Chips

Key Insights

• NVIDIA stock price wavered as concerns about its relationship with OpenAI continued.
• The stock will react to the upcoming AMD, Amazon, and Google earnings.
• The stock has formed a double-top and a head-and-shoulders pattern on the 12-hour chart.

NVIDIA stock started the week in the red. It crashed by over 2%. Meanwhile, the S&P 500, Dow Jones, and Nasdaq 100 moved close to their all-time highs.

NVDA stock retreated to $185, down sharply from the all-time high of $212. This article explores some of the top reasons why it may retreat as OpenAI expresses concerns about NVIDIA’s chips.

OpenAI Has Expressed Concerns About NVIDIA’s Chips

NVIDIA stock price is at risk. OpenAI, the biggest player in AI, has raised concerns about its inference chips. It is actively looking for alternatives.

According to Reuters, the company is considering chips from startups like Cerebras and Groq. Groq is a fast-growing semiconductor company.

It recently signed a major multi-billion-dollar deal. The company paid $20 billion for its license. This move highlights growing competition in the AI chip market.

OpenAI is also considering other companies, which will supply it with these chips. At the same time, it has reached a multi-billion-dollar deal with Broadcom. This deal will see OpenAI develop its chips and then hand the technology to Broadcom for manufacturing.

The company has also inked a deal with AMD as it seeks to reduce its dependency on NVIDIA. It is also in talks to use some of the chips that Amazon is making.

NVDA stock dropped on Monday. Investors reacted to a weekend Wall Street Journal report. Talks with OpenAI about a $100 billion investment had stalled. The report cited Jensen Huang, who noted that the deal was “never a commitment”.

Still, the company plans to make a big investment in OpenAI as part of a new round. This also includes companies like Amazon and Microsoft.

Next Key Catalysts for the NVIDIA Stock

Looking ahead, the next major catalyst for the NVIDIA stock price will come out on Tuesday when AMD publishes its earnings. NVIDIA investors pay close attention to AMD because it is its biggest competitor in the industry.

AMD’s business growth will signal that the AI boom is continuing. It will also show that fears of an AI bubble were overstated.

The average estimate is that AMD’s revenue rose by 26% in the fourth quarter to $9.67 billion. This brought its annual figure to $34 billion. This growth will be driven by its AI data center business and offset by its embedded solutions.

The other key earnings to watch will be Alphabet and Amazon. That will come out on Wednesday and Thursday this week. These are important companies as they are some of NVIDIA’s biggest customers. Also, they are building their ASIC chips, which they hope to use in their data centers.

These results come a few weeks before NVIDIA releases its financial results. It will provide more information about its business in the fourth quarter and the forward guidance.

The guidance will be important. It will likely include its Chinese business. Companies like Alibaba, ByteDance, and Tencent will play a role.

NVIDIA Stock Price Forecast: Technical Analysis

The 12-hour chart shows that the NVDA stock price has remained in a tight range in the past few weeks. A closer look shows that the stock has formed a double-top pattern at $193 and a neckline at $177. A double-top pattern often leads to a strong bearish breakdown.

The stock has also formed a giant head-and-shoulders pattern whose neckline connects the lowest swings since September 5 last year. It is also attempting to move below the 23.6% Fibonacci Retracement level at $182.

NVIDIA stock price forecast looks bearish. The next key support level to watch is $171. That was the lowest swing on December 16. A drop below that level will point to more downside, potentially $150, the 5p% Fibonacci Retracement level.

A move above the double-top level at $193 will invalidate the double-top pattern. It will also cancel the head-and-shoulders setup. This breakout will point to more gains.

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