Nvidia Stock Risks $194 as AI Selloff Wipes Out $836 Billion

Nvidia stock ended October at $204.64 after losing nearly 16% from its recent peak. The selloff followed earnings-related declines across major technology stocks and fresh concerns about artificial intelligence spending.

Investors also assessed weaker fundraising expectations for OpenAI and financing risks among AI infrastructure operators. However, cloud providers continued reporting rapid revenue growth, complicating claims that demand had collapsed.

Nvidia Stock Loses $836 Billion in Market Value

A rout is happening in the AI industry as concerns about whether it is in a bubble continues. These concerns accelerated this week when some of the biggest companies in the sector plunged after releasing their earnings.

Alphabet, the parent company of Google and YouTube, ended the week at $278, down by over 30% from the year-to-date high of $404.

Amazon, another top company spending over $220 billion in capital expenditure this year, ended the week at $240, down by over 16% from its all-time high. Meta Platforms has slumped by over 21% from the year-to-date high. Intel stock cratered by over 20% on Friday alone.

There were other major negative news in the industry. One of them is that OpenAI is raising funds at a $1.25 trillion valuation. While this is a big number, it is much lower than what the company was expecting. Its fundraising amount was $10 billion less than what it wanted to raise.

In another report, Blackstone, a top company in the private equity industry, said that it may not secure an investment-grade rating after its initial public offering. That would be a big event since Anthropic is expected to list at a $2 trillion valuation, making it the biggest company in the industry.

Nvidia is Exposed to an AI Slowdown

Nvidia is highly exposed to all these events. It is the biggest supplier of GPUs, generating over $104 billion in the second quarter. Analysts expect that its annual revenue will hit $411 billion this year followed by $692 billion.

At the same time, it is a big investor in some of the biggest companies in the AI industry, including OpenAI and Anthropic. It also suffered a big loss when the Intel stock plunged since it is its biggest investor with a stake that has now plunged to about $15 billion.

Nvidia is also a big investor in top neoclouds. It has invested in publicly traded companies like CoreWeave, IREN, and Nebius. It also has large stakes in private neocloud companies like Nscale, Lambda, and Firmus. These neocloud companies have come under pressure amid warnings that they may be forced to have large write-downs over time.

Neoclouds are also facing funding challenges. Just this week, Elon Musk warned that financing for unprofitable companies had essentially dried up. Indeed, bond yields of some of the biggest companies, including CoreWeave, have jumped to junk levels.

NVDA Stock Price Technical Analysis

The daily chart shows that the NVDA share price has slumped in the past few months, dropping from a high of $243 in October to the current $204. It has moved below the Point of Control (PoC) of the fixed range volume profile.

The stock has dropped below the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bears have already prevailed. Also, it slumped below the 38.2% Fibonacci Retracement level.

Therefore, the path of the least resistance for the stock is bearish, with the initial target being $198, the lower area value. A move below that level will point to more downside towards the 61.8% Fibonacci Retracement level of $194.

This article is informational, not financial advice. Stock investments involve volatility and possible capital losses.