Nvidia Share Price Finds Its Rhythm, But Is It Rising Too Fast?

Summary:
• Nvidia share price is currently enjoying a revival courtesy or a reported high demand for Blackwell GPUs. But there's a downside to it.

Nvidia share price continued its ascent on Friday, inching up by 0.04 percent to trade at $134.87. The stock has gained 8 percent in the last five sessions on news of a skyrocketing demand for its cutting-edge Blackwell AI GPU chips. Tech giants like Microsoft and Meta are engaged in aggressive training programs for their AI Large Language Model (LLMs), and Blackwell is the best GPU available for the immense computing power required for such programs.

The move is a double-edged sword for Microsoft. Its large purchases of Blackwell has given it an edge in the AI race on one hand while helping Nvidia leapfrog it into the second position among the world’s largest companies by market capitalisation on Thursday. Nvidia (NASDAQ: NVDA) says its Blackwell production is on schedule, with the product reportedly sold out for the next 12 months.

The high demand has reinvigorated Nvidia share price after its struggles in late August and September. However, the downside to it is that many investors are locking up the high sales forecast in their current purchases of NVDA. That could put downside pressure on the company’s earnings. Nvidia share price declined in the aftermath of its second quarter earnings release, as investors paid greater attention to reduced profit margins than the forecast-beating revenues.

Nvidia’s next earnings release will be in late November, and that will provide an opportunity to assess Blackwell’s true impact on the company’s performance. Also, Nvidia’s P/E rating of 63 against Microsoft’s 35 and Google’s 23 signals potential overvaluation.

Meanwhile, AMD launched Instinct MI325X GPU chips on Thursday, billed as Blackwell’s biggest rival yet. If it lives up to its billing, the chips could eat into a significant portion of Nvidia’s market and put pressure on Blackwell pricing.

Nvidia share price forecast

Nvidia share price pivots at 133.50, and the upside will likely prevail if the buyers keep the action above that mark. With the upward momentum in play, initial resistance could come at 136.00. However, if the momentum strengthens, that mark could become a support level, with the next price target moving up to 137.90.

On the other hand, the sellers could take control if the stock price breaks below 133.85. In that case, initial support could come at 132.00. However, extended bearishness could breach that level, invalidating the upside narrative. The resulting momentum could extend the decline to test 130.00.