Nvidia stock cascades below $130 despite 5G partnership with Verizon

• NVDA stock trades below $130 for the first time in two months.
• Verizon and Nvidia introduce private 5G network solution for AI.
• Nvidia stock also loses 100-day moving average for first time since October 2.
• Nvidia server chips are overheating, possibly due to supplier power storage component.

 

Nvidia (NVDA) stock traded some 2% to 3% lower on Tuesday morning, falling below $130 for the first time since October 15, more than two months ago. If shares end the day lower, this will be the fourth down session in a row.

The pullback is notable since Nvidia has announced a new partnership with Verizon and quantum computing stocks are surging off the charts. Quantum Computing (QUBT) traded up 42% on account of a new contract with the US government’s main space agency, NASA.

The Dow Jones Industrial Average (DJIA) is off 0.6% on Tuesday, down for the ninth straight session. The Dow Jones index has broken below the 50-day Simple Moving Average (SMA) for the first time since November 5. The DJIA includes Nvidia as its main semiconductor stock after it replaced Intel (INTC) in early November.

Nvidia stock news: Verizon 5G MEC partnership

Nvidia and Verizon announced their partnership on Tuesday with a new enterprise AI platform for the telecom’s 5G customers. The platform allows enterprises to build and run AI applications with private Mobile Edge Compute (MEC).

“Verizon’s 5G Private Network with Enterprise AI solution brings together Verizon’s secure, reliable, low-latency 5G private network and private MEC with Nvidia’s AI Enterprise software platform and Nvidia NIM microservices to deliver powerful, real-time AI services on premises for enterprise customers,” reads the statement from Verizon.

Verizon says the platform will begin its rollout in early 2025.

“Enterprises everywhere are racing to integrate AI solutions that bring new value to their employees, partners and customers, and can also help them operate with extreme efficiency,” said Ronnie Vasishta, senior vice president of telecom at Nvidia. “Verizon’s integration of Nvidia’s full stack AI platform into its new solution for running AI workloads on private 5G networks is a big step forward in helping enterprises of all sizes reach their business objectives faster with AI.”

Overheating Nvidia server chips

The negativity surrounding Nvidia may stem from worries that its state-of-the-art AI server chips are overheating at a rate above what many customers expected.

On Monday, TF International Securities analyst Ming-Chi Kuo said that Alpha and Omega Semiconductor (AOSL) supplies a power storage component called the DrMOS 5x5 that is included in Nvidia’s GB300 and B300 server systems.

The DrMOS 5x5 is a driver MOSFET (or metal-oxide-semiconductor field-effect transistor) that regulates electrical current conductivity.

The interior of an Nvidia server rack (Source: Nvidia)

"The chip itself may not solely cause the thermal issue but could also result from insufficient optimization in other designs, such as system thermal management," Kuo wrote in his blog post.

This news probably reflects poorly on Alpha and Omega first and foremost, but other Nvidia customers have been complaining in recent weeks about overheating in Nvidia's newest AI GPU, the Blackwell series of products.

Nvidia stock forecast

Nvidia has lost its perch above the 100-day SMA for the first time since October 2, which is significant. Though shares did rise in the lead-up to earnings on November 20, the $149 level has been acting as resistance and pushing shares of the semiconductor into consolidation mode.

A full break and close below the 100-day SMA could signal that Nvidia was attempting to a full pullback into the green ascending support range. At the moment this support range travels from $108 to $118.

This region is significant since it coincides with the $115 level, which acted as both resistance and support from July through October of this year. Additionally, the 200-day SMA sits at $115.75 on Tuesday. 

Nvidia stock would need to overcome the 50-day SMA near $140 in order to subvert this thesis and regain its uptrend status.


Nvidia daily stock chart