Nvidia stock drops under $140 per share while GPU prices slump

Key Takeaways:

  • Nvidia stock NVDA declined over 20%.
  • Restricted GPU sales to Russia and China could further hinder the industry.
  • The Q3 expectations are low as well.
Nvidia GPU, Nvidia stock drops under $140 per share while GPU prices slump
image from medium.com

YEREVAN (CoinChapter.com) – Nvidia, a company specializing in graphics processing units (GPU) manufacturing, saw its stock NVDA drop over 22% to $140 between Aug. 26 and Sep. 2.

The stock could drop even further, hitting descending support that has been significant for NVDA since January 2022. If the bearish prognosis pans out, the stock could hit $112, or 19% lower than the current price.

NVidia stock NVDA price. Source: TradingView.com
NVidia stock NVDA price. Source: TradingView.com

Moreover, the trading volumes registered a sharp spike in traders selling NVDA on Aug. 31. The dropping Nvidia GPU price and the geopolitically driven restrictions might be behind the stock decline.

Nvidia GPU prices drop

Nvidia, and AMD, another Silicon Valley chip maker, faced additional difficulties when the Biden administration imposed new restrictions on sales of some sophisticated computer chips to China and Russia in late August.

The restrictions were a part of the “cold war” between China and the United States for primacy in advanced technologies.

Also read: S&P 500 September slump scares market amid recession fears.

However, GPU sales have been declining since Q2 2022. According to the latest data, overall GPU sales fell by 14.9% compared to the previous quarter due to demand for PCs ebbing away. In addition, shipments of standalone graphics cards fell further than integrated, slumping by 22.6%, and Nvidia was hit hardest, with a 25.7% drop in sales for Q2.

As a result, NVidia’s Q2 sales fell 19% short of the previous quarter, recording a 3% uptick year-over-year. Jensen Huang, founder, and CEO of NVIDIA, commented on the Q2 results.

We are navigating our supply chain transitions in a challenging macro environment, and we will get through this. Accelerated computing and AI, the pioneering work of our company, are transforming industries. Automotive is […] on track to be our next billion-dollar business.

said the CEO.

What are the expectations for Q3?

Meanwhile, the company’s expectations for Q3 are bearish as well.

Revenue is expected to be $5.9 billion, plus or minus 2%. Gaming and Professional Visualization revenue is expected to decline sequentially. However, as mentioned in the quote above, the company expects that decline to be partially offset by sequential growth in Data Center and Automotive.

Additionally, the cryptocurrency market has been buying up the limited supply of GPUs in bulk, and scalpers have been selling them at exorbitant prices on the secondary market.

Manufacturers shunned marking down the values of graphics cards as much as possible. But they are not selling enough Nvidia GPU units to meet their desired demand. Thus, the upcoming quarter will shed more light on the GPU prices and their demand on the market.

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