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The NVIDIA stock price continued in a tight range this week as investors waited for the upcoming earnings and as they observed the new developments on some of its biggest competitors. NVDA was trading at $182, a few points below the all-time high of $183.65.
NVIDIA Stock Price Wavers After New Arm News
The NVIDIA stock price moved sideways after Arm, the giant British company hired Rami Sinno, who led its AI chips known as Trainium and Inferentia.
Arm hopes that the new hire will help it to develop new AI chips that will likely compete with what NVIDIA offers today.
This is a major change for Arm, a company that focuses on building architecture that other semiconductor companies, including NVIDIA use. It does not offer any hardware solutions for now, making the entry into the business a big deal.
One worry among analysts is that Arm will use its technology and strong balance sheet to manufacture products that will be used to compete with NVIDIA, thus eroding its market share over time.
Arm joins other chip companies that have joined the AI race. The most successful one has been Advanced Micro Devices (AMD), which has created GPUs and CPUs that are becoming popular among AI hyperscalers like Google and Microsoft. AMD now has an 11% market share in the sector as its AI division made over $3 billion in the second quarter.
The other potential risk for NVIDIA stock is the fact that the Donald Trump administration is considering taking a 10% stake in Intel, the struggling semiconductor company that has struggled to gain market share. Such an investment would give it the capital it needs to build quality GPUs.
Still, odds are that NVIDIA will be able to maintain its market share in the semiconductor industry because of its strong lead and the popularity of its chips. With Arm being in the first stages of development, it means that it has a long way to catch up with NVIDIA.
Most importantly, NVIDIA’s moat is the CUDA software, which has the biggest market share in the industry. This software helps to configure GPUs so that they can be used in the AI data center business
NVIDIA Earnings Ahead
The next most important catalyst for the NVIDIA stock price will be the upcoming financial results, which will provide more information about its business and the health of the AI sector.
The average estimate among Wall Street analysts is that its second-quarter revenue will be $45.8 billion, up 52% from the same period last year. Historically, NVIDIA’s revenue and earnings have come out better than expected.
As such, NVIDIA’s revenue will likely be at the higher side of the expected range, which is about $52 billion. The average earnings estimate is that the average earnings per share will be $1, higher that last year’s 68 cents.
The Trump administration’s decision to ban shipments of the H20 chips will impact NVIDIA’s earnings. In its last results, the company warned that the halt would cost it about $8 billion in lost revenue. On the positive side, the administration has allowed these shipments to resume.
NVIDIA Stock Price Technical Analysis
The daily timeframe chart shows that the NVDA stock price has been in strong uptrend after bottoming in April. It has formed a bearish divergence pattern as the MACD and the Relative Strength Index (RSI) continue falling.
The stock also remains much higher than the 50-day and 100-day Exponential Moving Averages (EMA).
Therefore, there is a risk that the NVIDIA stock price will drop as it forms mean reversion and as the bearish divergence pattern forms.
Mean reversion occurs when an asset returns to its historical averages, while bearish divergence happens when top oscillators fall as the price rises. If this happens, the stock drops to the 50-day moving average at $165.
