NVDA Bounces 4% as Memory Chip Shortage Eases AI Bottleneck

Nvidia (NVDA) rallied 4% to $210.96 on July 10, reversing months of losses that erased $1 trillion in market value. The stock had fallen 15% since May despite growing revenue forecasts, pushing its valuation below the S&P 500 average on a forward earnings basis. The rebound signals renewed confidence in AI infrastructure demand, yet the company now faces a new challenge: memory chip makers are capturing investor capital as data centers shift focus to high-bandwidth memory as the new AI bottleneck.

Why Nvidia fell from peak to cheaper than the S&P 500

Nvidia’s stock price dropped 15% from its May peak as the GPU shortage that defined 2024 and early 2025 began to ease. Investors shifted focus to memory companies, particularly Micron, which nearly tripled in value over the same period. Despite Nvidia’s projected revenue continuing to grow, the company now trades at a lower price-to-earnings multiple than the typical S&P 500 stock, a stark reversal for a firm that commanded premium valuations for years.

Memory becomes the new AI infrastructure play

Data centers now face a new constraint: high-bandwidth memory chips, not GPUs. Micron and other memory makers have raised prices as demand for specialized DRAM and memory components outpaces supply growth. This shift reflects the reality that GPUs alone cannot move data fast enough without supporting memory infrastructure. The bottleneck has made memory companies the hotter trade, drawing capital that might otherwise flow to Nvidia.

Blackwell demand remains strong despite valuation pressure

Supply-demand imbalance for Nvidia’s Blackwell architecture remains significantly ahead of supply, according to supply chain indicators cited by traders on July 10. Cloud service providers continue aggressive data center expansion, and analysts cite Nvidia’s expanding software ecosystem and networking integration as competitive strengths. The July 10 rally reflects this underlying demand, even as the stock remains down 15% from May highs.

Meyka data shows mixed signals on valuation

Meyka rates Nvidia a B+ with a 12-month price target of $216.92, suggesting modest upside from current levels. The stock trades at a PE ratio of 36.12, well above historical norms, while the RSI sits at 56.07, indicating neither overbought nor oversold conditions. Meyka’s DCF and ROE scores both rate the stock a Strong Buy, but the PE score is Sell, reflecting concerns about valuation relative to earnings growth.

Final Thoughts

Nvidia’s 4% bounce on July 10 reflects persistent demand for AI infrastructure, but the shift to memory chips as the new bottleneck poses a strategic challenge. With Meyka grading the stock B+ and targeting $216.92, the data suggests limited upside unless Nvidia expands beyond GPUs into the full AI stack.

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The content shared by Meyka AI PTY LTD is solely for research and informational purposes.  Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.