TLDR
- Nvidia stock fell 0.8% in premarket trading to $176.29 on Friday
- Questions raised about sustainability of AI boom due to circular investment deals like Nvidia’s $100 billion OpenAI investment
- AI chip stocks including AMD and Broadcom also declined in premarket trading
- Barclays analyst raised price target to $240 from $200, maintaining buy rating
- Stock dropped below 50-day moving average Thursday before recovering to close up 0.4%
Nvidia stock took a step back Friday morning, falling 0.8% to $176.29 in premarket trading. The decline comes just days after the AI chip giant hit an all-time high of $184.55 on Monday.
The pullback isn’t happening in isolation. Other AI-focused semiconductor companies are also feeling the pressure.
Advanced Micro Devices dropped 1.1% while Broadcom fell 0.7% in premarket trading. The broader AI chip sector appears to be experiencing some turbulence after a strong September run.
Market strategists are pointing to specific concerns about the structure of recent AI investments. Nvidia’s up-to $100 billion investment in OpenAI has raised eyebrows on Wall Street.
The deal structure has analysts questioning its sustainability. Much of Nvidia’s investment in OpenAI is expected to return to the company through chip purchases.
“Toppy markets after the record high on Monday met some indigestion of Nvidia’s $100bn ‘investment’ in OpenAI,” wrote Saxo Markets strategist Neil Wilson. He also cited worries about government shutdown concerns and rising yields.
Technical Challenges Surface
Thursday’s trading session revealed some technical weakness in Nvidia’s chart. The stock briefly dropped below its 50-day moving average line after market open.
This represents a negative technical signal for traders who follow chart patterns. However, Nvidia managed to climb back to that key level by the session’s end.
The stock closed Thursday up 0.4% at $177.69. This recovery showed some resilience after the earlier technical breakdown.
The recent volatility has prompted some analysts to suggest a cooling-off period might be healthy. Mizuho Securities analyst Jordan Klein called it a “modest reset and wake-up call.”
Klein suggested it’s “sometimes best to be careful and not get greedy” after the steep September gains. He recommended investors consider taking profits or waiting on the sidelines.
Wall Street Maintains Optimism
Despite the recent choppiness, analyst sentiment remains largely positive. Barclays analyst Tom O’Malley raised his price target to $240 from $200 on Thursday.
O’Malley maintained his overweight rating on the stock. He cited increased cloud computing investments in AI data centers as a key driver.
The analyst noted more than $2 trillion in planned AI infrastructure investments. He sees Nvidia as the primary beneficiary of this spending wave.
The investment thesis extends beyond just Nvidia. O’Malley believes the trend will also benefit AMD and Broadcom as AI accelerator demand grows.
UBS remains constructive on the broader AI adoption story. Chief investment officer Mark Haefele pointed to U.S. Census Bureau data showing steady improvement in AI adoption rates.
The survey tracked more than a million U.S. firms. Haefele believes the industry is entering a new growth phase with accelerating penetration rates.
Nvidia stock carries a best-possible IBD Composite Rating of 99. This rating reflects the company’s strong fundamental and technical performance metrics.
The stock has gained substantial ground in 2025 before this recent pullback. Monday’s record high represented the peak of a strong September rally for AI-related stocks.
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