Key Insights:
- Nvidia stock has wavered amid fears of an AI bubble.
- Current data shows that AI spending will continue this year.
- Technical analysis shows that the NVDA stock price has more upside.
Nvidia stock price has moved sideways since July as it ignored some major news events. One potential reason for this consolidation is the fear that the AI industry is in a bubble that could burst soon. This article explores whether these fears are founded and whether the NVDA stock has more upside.
Nvidia Stock Price Wavers Amid Fears of an AI Bubble
Some analysts are sounding caution on the ever-growing artificial intelligence industry. Some analysts believe that the AI industry is still in its infancy and will ultimately change the world as the internet did.
In a report, UNCTAD estimated that the industry will be worth over $4.8 trillion by 2033. These estimates would benefit Nvidia, the most dominant player in the industry.
However, other analysts have predicted that the AI bubble could be underway. They have cited the huge spending on AI and the minimal return on investment experienced by the biggest players.
Some analysts have compared the AI bubble with the dot com one, which burst in the early 2000s. One of these experts is Brett Taylor, the former Salesforce CEO, who called the industry a bubble, where many people will lose a lot of money as some companies go bankrupt. However, he noted that, like in the dot-com bubble, there will be some major winners in the long term.
Signs Show that AI Growth Will Continue For Now
It is still too early to predict whether the AI growth is a bubble. However, based on the recent announcements, what is clear is that spending on data center will continue.
One of the main announcements this week was from Microsoft, which entered into a $17 billion deal with Nebius. Nebius, a data center company, will provide Microsoft with its solutions for years.
The announcement was notable since Microsoft is currently the biggest spender in the data center industry. Inking a deal with Nebius is a sign that the company expects its internal investments to be insufficient.
The other major news came from Oracle, which published strong financial results. While its revenue growth was modest, its Remaining Performance Obligations (RPO) rose by 359% driven by the AI business.
Meta Platforms, the parent company of Instagram, Facebook, and WhatsApp, pledged to spend over $600 billion in AI by 2028.
Other hyperscalers like Google and Amazon and smaller names like Nebius, IREN, and CoreWeave are boosting their spending. For example, CoreWeave expects to spend over $26 billion in capital spending this year.
AI Spending to Boost Nvidia Earnings
Competition is one of the fears that have pushed the Nvidia stock price into a consolidation mode. For example, there is a fear that Nvidia’s business will be hurt by the recently announced partnership between Broadcom and OpenAI.
Additionally, concerns have been raised about the innovation of companies like Alibaba and Cambricon. However, these companies are unlikely to disrupt Nvidia’s numbers meaningfully.
A notable example is AMD, which has developed competitive chips but has struggled to gain market share. Analysts expect Nvidia’s earning growth this year will be 58% to $206 billion.
It will then slow to 32% to $273 billion next year. Such a slowdown will be healthy for the company. Even if it grows by a modest 15% each year after that, its revenue will be $500 billion in 2030.
NVDA Stock Price Analysis
The NVDA stock price has remained in a narrow range in the past few months. On the positive side, it has formed a bullish flag pattern resembling a hoisted flag. This pattern normally results in a strong bullish breakout.
Additionally, the stock has formed a broadening wedge pattern known as a megaphone. This pattern is made up of two diverging trendlines and it often results in a bullish breakout. The stock remains above the 50-day and 100-day moving averages.
Therefore, using the Murrey Math Lines tool places the potential target for the Nvidia stock price at $225, which is up by about 27% from the current level.
However, a drop below the major S/R pivot point of the Murrey Math Line at $150 will cancel the bullish outlook.
Crispus is a distinguished Financial Analyst at, bringing over 12 years of expertise in cryptocurrency markets, specializing in Bitcoin and altcoins. Renowned for his sharp insights at the nexus of market trends and breaking news, Crispus delivers actionable analysis to empower investors. His work is prominently featured across leading platforms, including BanklessTimes, CoinJournal, HypeIndex, SeekingAlpha, Forbes, InvestingCube, Investing.com, and MoneyTransfers.com, cementing his reputation as a trusted voice in the financial world.
