NVIDIA stock price has wavered recently and has continued to underperform the broader market this year. It remains in a correction even as the S&P 500, Nasdaq 100, and Russell 2000 indices have reached record highs. This article explores the key catalysts for the NVDA stock this week and why it may be on the cusp of a bearish breakdown.
NVIDIA Stock to React to AMD Earnings
The primary catalyst for the NVIDIA stock price this week will be AMD’s latest earnings, scheduled for Tuesday.
Wall Street analysts expect the results to show that its revenue growth accelerated in the last quarter. The average estimate is that its revenue rose by 26% to over $9.6 billion, bringing its annual figure to over $34 billion, up by 32% YoY.
Analysts also expect its guidance for this year to be $45 billion, up 32% from last year’s results. This growth is being driven by the ongoing demand for AI chips as large companies accelerate their spending.
AMD’s results are important because they will provide additional information on AI growth. Strong numbers will benefit NVIDIA, its largest competitor.
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Potential Approvals for H200 Chips Buying
Another key catalyst for NVIDIA stock price will be more approvals for Chinese companies to purchase additional H200 chips. Authorities have permitted companies such as Alibaba, ByteDance, and Tencent to purchase 400,000 chips valued at over 10 billion.
On Friday, Reuters reported that authorities had allowed DeepSeek, a top competitor to ChatGPT, to acquire the chips. Therefore, there is a likelihood that more companies will be allowed to purchase.
Data indicate that Chinese companies are preparing to order as many as 2 million H200 chips, valued at over $50 billion. However, authorities are working to reduce the number in a bid to promote local chips.
NVIDIA Investment in OpenAI News
Meanwhile, the NVIDIA stock price will respond to the announcement of its investment in OpenAI, the creator of ChatGPT. In a statement to Bloomberg, Jensen Huang, NVIDIA’s CEO, confirmed that the company planned to make its largest investment to date in OpenAI. However, he did not mention the amount.
The statement came as the Wall Street Journal reported that its previously announced $100 billion investment in OpenAI had stalled after some officials at NVIDIA expressed concerns about the deal. Huang also noted that the commitment was nonbinding.
NVIDIA has been criticized for circular investments, in which it invests in companies that use the proceeds to acquire its chips, thereby boosting its stock price.
Google and Amazon Earnings
The other major NVIDIA news this week will be the upcoming earnings reports from Amazon and Google, two of its largest customers. These results are important because they will provide additional information on their cloud computing revenue and on whether they plan to continue spending.
The numbers come a week after Microsoft, NVIDIA’s biggest client, published results that showed that its cloud computing growth was slowing, leading to a $331 billion wipeout as the stock crashed
Amazon and Google will also discuss the ASIC chips they are developing, which may reduce their reliance on NVIDIA in the future. Google has also hinted that it may start selling its TPU chips to other companies.
NVDA Stock Has Formed Risky Patterns
The main risk that the NVDA stock price faces is that it has formed a head-and-shoulders pattern on the daily chart.
This pattern comprises a head, two shoulders, and a neckline, as shown in the chart above. It has also formed a small double-top pattern at $193.90 and a neckline at $177.
Therefore, the combination of a double-top and a head-and-shoulders pattern points to a deep dive in the coming weeks.
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