- Summary:
- Nvidia stock price faces headwinds as its Blackwell GPUs faces thermal heating issues that could impede production amid "insane" demand.
Nvidia stock price decline extended in the pre-market session on Tuesday, with investors repositioning themselves in reaction to news of thermal issues with the company’s GPU chips. The stock traded at $129.62 at the time of writing, its lowest level in over two months.
Nvidia (NASDAQ: NVDA) previously formed a triple-bottom pattern on the daily chart, and a break below the psychological $130 mark affirms the strengthening of the downward momentum.
Blackwell overheating cools down Nvidia stock price
The Blackwell GPU series is an AI chip of its own class and capacity, with speeds up to 30 times faster than Nvidia’s highly successful Hopper H100 chips and users 25 times less electricity. This has seen its demand jump to “insane” levels, as described by CEO Jensen Huang.
However, it has emerged that the chips are overheating when connected to server racks with a capacity of up to 72 chips. While Nvidia has asked its suppliers to redesign the server racks, its large delivery inventory means it could impact large customers, including Meta, Amazon, Alphabet and Microsoft.
Worse still, the overheating challenge could impede production at a time when Nvidia is struggling to meet the high demand for Blackwell GPUs. That could result in lower revenues and bring downward pressure on Nvidia stock price.
With the stock price having risen by 168% year-to-date, some investors consider it an inappropriate time to buy NVDA when it is facing such a critical bottleneck. Therefore, more investors are likely to wait until the company addresses the overheating issue comprehensively. Also, potential buyers hope to leverage the pullback and buy the stock at lower prices.
Nvidia stock price prediction
Pivot: Nvidia stock price pivots at $130.40 and the downside will prevail if resistance persists at that level.
Resistance: Immediate resistance is likely to be at $132.10. However, if the upside momentum strengthens, NVDA could break above that level and test $134.30.
Support: The first support will likely come at $128.70. Breaking below that level will invalidate the upside narrative. Meanwhile, the downward momentum could extend the decline and test $127.00.
