Is it too early to short NVIDIA?…AI's 'Optimal Timing'

▲ NVIDIA/Source: X ©

Although NVIDIA's upward trend has slowed and it has undergone a correction from its peak this year, ChatGPT analyzed that now is not the time to short the stock. Instead, late October to early November this year, when clients' artificial intelligence (AI) investment plans become concrete, was suggested as a more appropriate time.

According to Finbold, a cryptocurrency specialized media outlet, on July 6 (local time), OpenAI's generative AI ChatGPT assessed that NVIDIA's current stock price is more heavily influenced by the sustainability of the AI investment cycle than by quarterly GPU demand. In particular, it analyzed that NVIDIA's future stock price direction depends on major clients' 2027 capital expenditure (CapEx) plans, and the most suitable time for short-selling is likely to be from late October to early November this year.

ChatGPT suggested a slowdown in clients' capital expenditure growth or a decrease in investment scale as a signal for short-selling. However, it explained that as of July 6, such changes have not been confirmed, and whether an actual reduction in investment will occur is still uncertain.

Meanwhile, news of the delay in the release of NVIDIA's next-generation 'Kyber' rack for Vera Rubin was reported on the same day, leading to the view that it could be a short-selling opportunity in the short term. However, the media reported that considering after-hours stock price movements and long-term effects, this delay could actually act as a positive factor for NVIDIA.

The media explained that compatibility issues between existing Oberon-based systems and the next-generation Kyber racks have raised the possibility that clients would have to extensively remodel or build new data centers. With this schedule delay, clients can utilize their already adopted equipment for a longer period, thus alleviating the burden of immediately executing billions to trillions of dollars in additional capital expenditures. However, it assessed that it is uncertain whether the demand for next-generation racks can continue to support NVIDIA's high growth rate and current market capitalization level amidst ongoing concerns about an oversupply of AI computing power.

NVIDIA's stock price has seen a slower increase this year but is still up 3.17% year-to-date. Furthermore, despite the news of the next-generation rack release delay, it rose 0.47% from $194.83 to $195.75 in pre-market trading on July 6. The media predicted that, given the limited growth this year and a significant correction from its peak market capitalization of over $5.5 trillion, and considering that competitors like AMD and Intel have seen triple-digit growth rates this year, a sharp drop in NVIDIA's stock price is unlikely unless there is major negative news.

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