Nvidia Stock May Benefit From SpaceX IPO and AI Industry Expansion

Key Insights

• Nvidia stock price has retreated by 13% from the year-to-date high.
• The company may benefit from the upcoming SpaceX IPO.
• Nvidia has started to market its Vera chips to Chinese clients.

Nvidia stock remained under pressure on Friday, trading near $204 in pre-market activity. The shares have retreated from their yearly high near $236 despite strong financial results and continued demand for artificial intelligence infrastructure.

Investors are now evaluating whether new growth drivers can support another recovery phase for the stock.

Nvidia shares have come under intense pressure in the past few weeks despite having major catalysts, including the most recent financial results, which showed that its business was doing well.

One of the top catalysts the company faces is the upcoming SpaceX IPO, which is set to happen today. The company has raised $75 billion, with its valuation rising to over $1.78 trillion, making it the biggest IPO on record.

While Nvidia has not invested in SpaceX, there are ways in which its business will benefit from this IPO. One of them is the fact that SpaceX spends billions of dollars a year buying chips from Nvidia.

It is mostly buying these chips for its xAI business, which is made up of its X and Grok brands. Therefore, the company will likely use some of the $75 billion it is raising today to accelerate its GPU deployment.

Just recently, Google entered a partnership with SpaceX. In this deal, Google will pay SpaceX to get a cluster of 11,000 GPUs and other solutions. In return, Google will pay SpaceX $920 million a month between October this year and June 2029.

Therefore, there is a likelihood that SpaceX will want to expand this business by buying Nvidia GPUs over time. Such a move may lead to more multi-billion dollar orders from other companies in the next few years.

Most notably, if the SpaceX IPO is highly successful, it will lead to the acceleration of AI company listings. Anthropic and OpenAI have already filed for their IPOs, while Perplexity is said to be considering filing soon.

Nvidia will benefit from the OpenAI IPO because the company made an investment in it at a $850 billion valuation. If OpenAI’s valuation surges to $1.5 trillion as analysts predict, it means that Nvidia has almost doubled its funds within a few months.

Anthropic will also go public this year, raising billions of dollars. While Anthropic does not use Nvidia GPUs, its massive fundraising may push the management to expand its usage. For example, it recently inked a deal to lease computing capacity from CoreWeave, a company that builds data centers using Nvidia chips.

All this is happening at a time when Nvidia is starting to market its newly launched Vera CPUs in China. This is a major move as China is a major market that is spending billions of dollars in the AI space.

According to Reuters, a single Vera processor will cost over $20,000, with a fully configured rack of 256 chips selling for $10 million. As a result, the company aims to make $20 billion from Vera chips this year.

The daily chart shows that the NVDA stock price has slumped in the past few months. It has slumped from $236 in May to $204 today. Most recently, it dropped below the crucial support level at $212, confirming the bearish breakout.

On the positive side, the stock has bottomed along the 100-day Exponential Moving Average (EMA). It also bottomed along the Major S/R Pivot Point of the Murrey Math Lines tool.

Therefore, there is a likelihood that the stock will bounce back in the near term. If this happens, the next key level to watch will be at $225, which coincides with the ultimate resistance of the Murrey Math Lines tool. However, a drop below the key support level at $187 will invalidate the bullish outlook.

The post Here’s Why Nvidia Stock May Benefit From Today’s SpaceX IPO appeared first on The Market Periodical.