NVIDIA shares remain at risk of a correction after their impressive rally in recent months. The key headwind is rising US Treasury yields, with returns on 10-year bonds approaching 5%. The surge has reinforced market expectations of a September hike by the Federal Reserve (Fed). This is particularly important for NVIDIA, given the company’s high valuation: an increase in risk-free yields raises the discount rate applied to future cash flows, making expensive tech stocks less attractive compared to bonds. Unfortunately, the list of troubles goes on, with elevated Brent crude prices being the next hurdle. Oil is currently flying near $100 per barrel, raising inflation risks and keeping the US regulator on a hawkish footing.
What else could stand in NVIDIA’s way? Hot competition in artificial intelligence chip production. China is the most evident example; the company has been losing ground to fast‑growing local rivals. According to Reuters, NVIDIA’s share of the Chinese AI processor market has fallen to roughly 55% from the near-monopoly levels it previously held. At the same time, its largest US clients are actively investing in their own solutions. This week, Amazon signed a major agreement with Qualcomm to develop and supply AI chips—a clear sign of tech companies’ desire to diversify their suppliers.
On the technical side, the stock failed to break above the resistance zone between $226 and $236, pulling back with a potential target at the $200 support level.
The final recommendation is to sell NVIDIA shares at the current price of $225, aiming for $200 within a couple of weeks. To mitigate the risk of adverse market movements, place a Stop Loss order at $236.
This content is for informational purposes only and is not intended to be investing advice.
