Nvidia stock rose Monday afternoon, after edging down earlier in the session. The chip maker looks like it needs upbeat earnings to break out of its rut.
The shares closed up 2.9% at $206.64, and were up as much as $208.74 in midday trading. Shares have moved sideways in the past three months, rising 1.1%.
So far, the earnings season hasn’t provided much of a catalyst. Despite Big Tech companies largely raising their capital expenditure forecasts, there are doubts about whether Nvidia will be the primary recipient amid soaring costs for other artificial-intelligence hardware such as memory chips.
The bigger picture is that the AI trade itself seems to be faltering amid higher borrowing costs, which means it is tough for Nvidia to make much headway. Nvidia’s own efforts to get things moving by lending its balance sheet to AI companies—what Barron’s has termed “acting as a combination of venture capitalist and central bank”—are being treated with skepticism.
“Companies that were once huge cash generators are now spending so much on AI infrastructure that they have become large borrowers,” wrote Stephen Coltman, head of macro at 21shares, in a research note. “Even Nvidia, the mega cap with the largest profit margins, is seeing its credit spread widen as it is reported to be offering vendor financing and credit guarantees worth hundreds of billions to its customers.”
However, Nvidia’s earnings report on Aug. 26 could provide impetus if investors sense a bargain. The average price target across Wall Street is $314.29, according to FactSet.
The stock is up 10.8% this year and 14.8% over the past 12 months.
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