NVDA trades lower Friday despite stock-cheering Nonfarm Payrolls

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• Nonfarm Payrolls for August provided data showing Fed may not require more hikes.
• NVDA stock has been forming Japanese candlestick doji patterns late this week that demonstrate uncertainty among bulls.
• Intel’s Gaudi 2 chip is being called a competitor to Nvidia’s H100.
• Samsung signs deal to begin supply high bandwidth memory chips to Nvidia.

Nvidia’s (NVDA) stock price edged over 1% lower during Friday’s main session despite news from the US Bureau of Labor Statistics that should have had Wall Street cheering.

US Nonfarm Payrolls data for August arrived at 187K, which although higher than the 170K expected was not high enough (200K) to warrant renewed inflationary fears. More significantly, July’s NFP results were revised down from 187K to 157K, and the Unemployment Rate rose from 3.5% to 3.8%.

The overall lacklustre labor market data means that the Federal Reserve has less reason to raise interest rates at its September or November meetings. Since higher interest rates are negative for businesses because they push up the cost of borrowing, the data should have been on balance positive for stocks. However, that’s not how it played out.

Nvidia stock dropped to $488 after trending up above $497 earlier in the day. The NASDAQ Composite has drifted 0.2% so far in the session; and the S&P 500 is marginally down at the midpoint of the US session.

Nvidia stock news 

Nvidia has closed a deal with Samsung to buy the Korean company’s HBM3 memory chips for use with its artificial intelligence-focused platforms and data centers. Samsung’s stock advanced 6% in the Korean stock market as the report said Samsung would likely supply as much as 30% of Nvidia’s High-Bandwidth Memory needs in 2024.

Until now, Nvidia has relied on SK Hynix for all its HBM3 chips used its A100 and H100 GPUs built for use in generative AI technologies. Another rumor says that executives from Samsung’s foundry division are also in talks with the upper echelon of Nvidia to offer chip packaging services to the leading AI chip maker. Nvidia has been largely using Taiwan Semiconductor (TSM) for all its chip packaging demand, but the latter foundry is fully booked at the moment with hefty demand for AI-related chip manufacturing.

In a first broadside against Nvidia’s lead among AI-focused semiconductors, Intel’s (INTC) Gaudi 2 chip is being touted as a possible competitor. Hugging Face, the machine-learning platform provider, recently tested the Gaudi 2 chip against Nvidia’s H100. While they determined that the H100 still wins on average across a broad range of AI workloads, they wrote in a blog post this week that the Gaudi 2 is as much as 41% faster when fine tuning vision-language models. 

This is because the Gaudi 2 utilizes in-chip hardware-based decoders to help the CPU in managing its workload before the computations are sent to the AI accelerator. Hugging Face’s test shows that Nvidia may be leading the pack, but it will not be the only game in town for long.