Is Nvidia Stock at Risk Amid Plans for Meta to Sell its Spare Capacity?

Key Insights

• Nvidia stock price has retreated in the past few weeks.
• Meta Platforms is considering selling its data center spare capacity.
• There is a likelihood that Meta will start slowing its AI spending.

Nvidia stock has retreated sharply this year, mirroring weakness across several semiconductor companies, including Marvell, Intel, and Broadcom. Although analysts continue expecting strong earnings growth, investors are reassessing whether hyperscalers can sustain record AI infrastructure spending.

Nvidia Stock Falls as Meta Platforms Signals Capex Pullback

AI-related semiconductor stocks weakened this week, with companies such as SanDisk, Micron, and Western Digital extending recent declines.

The biggest development came from Bloomberg, which reported that Meta Platforms is exploring options to monetize excess data center capacity. The company remains one of the world’s largest AI infrastructure investors, with capital expenditure expected to exceed $145 billion this year.

Bloomberg did not state that the move reflects weaker AI demand. However, the report has prompted investors to question whether hyperscalers are beginning to optimize infrastructure spending after an aggressive investment cycle.

Meta AI also continues competing in a crowded generative AI market. Industry reports show ChatGPT remains the dominant chatbot platform, while Meta AI holds a much smaller share despite its broad distribution across the company’s ecosystem.

If Meta eventually moderates future infrastructure expansion, Nvidia could face slower demand growth from one of its largest customers.

Microsoft, Google, and Amazon Could be Next

The latest reporting by Meta Platforms may put more pressure on other large companies to start slowing their capital expenditures in the coming months.

A good example of this is Microsoft, which makes about 20% of Nvidia’s sales. Microsoft stock has dropped by over 34% from its peak last year, with analysts pointing to its massive capital expenditure plans. In its recent statement, Microsoft said that it will be spending $190 billion in capital expenditure this year. This is partly because investors are concerned about the return on investment now that Copilot has not gained market share in the AI chatbot industry.

Amazon’s stock price has dropped by over 14% from its highest point this year as it plans to spend over $200 billion this year. Google, another customer, also plans to spend billions of dollars.

Therefore, there is a likelihood that these companies will do well once they signal that they are slowing their spending. Also, these companies may start to pivot towards their own chips.

Another red flag for Nvidia is its circular investments. In a statement today, the company said that it will offer fast-growing startups access to computing power in exchange for future profits. It has already made circular investments to companies like Nebius, CoreWeave, and OpenAI.

Still, on the positive side for Nvidia, analysts believe that its revenue growth will continue doing well. The average estimate is that its second-quarter revenue jumped by 96% to $91.73 billion. Also, they expect that its revenue will jump to over $102 billion in the third quarter.

The stock also trades at a bargain, with the forward price-to-earnings ratio moving to 22. This makes it cheaper than the broader S&P 500 Index and other companies like Marvell and AMD.

Nvidia Stock Price Technical Analysis

Another positive is that the NVDA stock has formed some bullish patterns this year. It has already formed a falling wedge pattern, which is made up of a descending and converging trendlines. An asset normally rebounds whenever the two lines are about to converge.

The stock has remained above the 200-day Exponential Moving Average (EMA), which stands at $188. Also, the Relative Strength Index (RSI) is about to cross the moving average.

Therefore, the stock may rebound and hit the key resistance level at $235. If this happens, the shares may continue rising, potentially to the psychological level of $300.

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