• Nvidia stock (NVDA) hit a record high of $480 on Aug 22.
• US market instability and China’s economic woes pose a threat to Nvidia’s long-term upside potential.
• Demand for GPUs dropped ahead of the Bitcoin halving.
Nvidia Stock NVDA Hits Record High
Nvidia, a company specializing in graphics processing units (GPU) manufacturing and AI technologies, saw its stock NVDA soar over 240% year-to-date and cross $480 per share on Aug 22, establishing an all-time high. The stock then declined 5% in presale on Aug 23, threatening a bearish continuation.
US Recession Fears Threaten Nvidia Stock Price
The US Federal Reserve has been battling post-Covid inflation by raising interest rates and slowing down the economy. Eleven consecutive revisions later, the market participants expect Fed Chair Jerome Powell to give another hawkish speech on Friday, Aug 25, at Jackson Hole . Economist polls have suggested the high likelihood of a recession in the US and eurozone for nearly a year as the Fed’s hawkish moves are roiling bond and interest rate markets, putting significant stress on the economy. If another rate hike follows in September 2023, the stock market will be in more trouble, triggering a fresh wave of recession fears. Tech Stocks dwindle in August. Source: MarketWatch.com Tech stocks have been declining throughout August despite the year-to-date growth. Should the bearish streak continue, NVDA is likely to join in. According to investor and trader Derek Quick , most of Nvidia’s investment portfolio comprises US government securities which are at risk especially with the recent US Government credit rating .
China’s Economic Woes Could Tumble Nvidia Stock
On Aug 17th Evergrande , a China-based real estate giant filed for Chapter 15 bankruptcy in Manhattan while its affiliate Tianji Holdings went bankrupt reigniting worries about China’s real estate market Overall this unprecedented debt crisis in property sector which accounts for roughly quarter of entire economy exacerbated anxiety over weakening economy The 36 billion liquidity influx also pushed Yuan to 0 13 level against dollar further stoking fears about Chinese economic slowdown This could eventually trickle down to affect business sentiments all across Asia including that of semiconductor companies like Nvidia
Demand For GPUs Drops Ahead Of Bitcoin Halving
Ahead of Bitcoin halving event scheduled for May 2020 demand for GPUs plummeted significantly due to uncertainty around future prices As cryptocurrency based mining activities account for sizable chunk of GPU sales decline was expected by investors however none had anticipated such steep drop Even after halving event demand remained slow due primarily to growing competition from ASIC miners that can generate equivalent hash power at much cheaper cost compared to GPUs
Impact On Nvidia Stock Price
Given above factors it won’t be surprising if we see slight pullback or consolidation near current levels before further uptrend Any sudden unfavorable development either from macroeconomic or political front could result into sharp plunge Therefore investors should remain vigilant while investing into this highly volatile security