Nvidia is facing significant challenges as its stock slides into correction territory, dropping 11% from its record high. Analysts attribute this decline to severe thermal issues in power chips utilized in its AI server systems. TF International Securities analyst Ming-Chi Kuo reported that Nvidia is encountering major problems with DrMOS chips produced by Alpha & Omega Semiconductor and Monolithic Power Systems. This situation could delay mass production of Nvidia’s latest GB300 and B300 systems.
Nvidia faces stock decline amid thermal issues in chips
The stock market reacted negatively, with Nvidia shares falling 1.7% to close at $132, down from a buy point of $140.76 established on October 17. After hitting a peak closing price of $148.88 last month, the stock is now in the stop-loss sell zone, which begins at $130.91. The decline has prompted profit-taking on Wall Street, as Nvidia’s recent performance contrasts sharply with the overall market’s upward trend.
Investors are concerned that Blackwell’s thermal issues might not only impede production but also signal wider difficulties within the semiconductor sector. Other companies in the chipmaking space have fared better, with stocks like Broadcom and Micron Technology rising significantly. Broadcom managed to surge about 11% as it surpassed a $1 trillion market capitalization, following a strong earnings report. This divergence raises questions about the sustainability of Nvidia’s dominance in the market.
Nvidia’s Blackwell GPUs are so hot, they could bake a cake
Nvidia’s challenges are particularly notable as the company remains integral to the AI infrastructure, which has increasingly relied on its GPUs since the rise of large language models. However, the current supply issues prompt analysts to consider the potential for a market rotation away from Nvidia and towards other players in the semiconductor field. Roth MKM highlighted that the $125 to $130 support level is critical not just for Nvidia, but for the overall health of the market.
Looking ahead, Nvidia could potentially form a flat base with a buy point of $152.89 if it maintains stability in its stock performance. Yet, the focus remains on how the thermal issues will impact the company’s production timelines and market share. As investors watch closely, the developments regarding Nvidia’s supply chain and operational efficiency will be crucial.
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Featured image credit: Nvidia
