Last Friday, Nasdaq (QQQ) barely bounced back to end the three-day sell-off streak. The index, weighted heavily in technology, traded as high as around 23,100 before closing up by 0.13%, at 22,900.6.
Nvidia (NVDA) bounced off technical support levels of $180 to close at $186.60. It reports quarterly results on November 19. Worried investors started to question the depreciation rates of the GPU chip supplier. Companies that are buying billions of dollars’ worth of graphics cards are aggressively hiding such operating costs. Those firms are assuming a longer lifespan for AI servers. However, gaming PC buyers know better.
Gaming GPUs typically sell for 10-20% above MSRP at launch. Pent-up demand, created by Nvidia shortages, along with scalpers demanding higher prices, lifts prices. Gamers cannot buy previous-generation chips at a discount, since Nvidia cuts supply months before the release.
In the AI server market, corporations face more than price challenges. They are in a race to build the fastest AI cloud. For example, food delivery firm Meituan in China also offers AI solutions that are better than American-based ones. The open-source AI is called LongCat. It also offers no-code agents to power its food-delivery service development. In addition, China’s gaming firm Tencent (TCEHY) has Hunyuan, an AI large language model. Its customer-facing AI is named YuanBao.
Your Takeaway
Nasdaq’s three-day sell-off is a potential preview of a bearish market phase next. China’s AI offering is superior to ChatGPT’s latest model. This forces U.S. firms to continue spending heavily to stay ahead. That may prove unsustainable.
Tech Insider
