AI narrative tokens recover in August ahead of Nvidia earnings

AI narrative tokens nearly doubled their market cap since the August correction, recovering after the surge of Artificial Superintelligence (FET). The AI token narrative is one of the more successful sources of gains in 2024, with several assets still outperforming. 

AI tokens reawakened in August, especially after the recent Artificial Superintelligence (FET) rally (formerly known as Fetch.AI). The collection of infrastructure, AI, and big data tokens expanded to a market cap of $32B in August, up from a temporary low of $18B after the most recent market correction. 

The AI narrative was one of the strong performers in 2024 before being displaced by meme tokens and a shift to leading blue-chip assets like Bitcoin (BTC) and Ethereum (ETH). Within the past week, leading AI tokens expanded again, adding between 20% and 40% to their valuation. The recovery was led by Near Protocol (NEAR), with a positive performance from RENDER and TAO. 

AI tokens rally ahead of the Nvidia report

One of the reasons for a recent shift to AI tokens is the upcoming Nvidia earnings call, expected after August 27. The expectation of outperformance from Nvidia sparked a rally for some of the assets, which led to a recovery above 61% from recent lows. 

The rally of AI tokens is building on top of the general popularity for those types of assets. Searches for AI tokens remain at a high baseline since January 2024. The narrative also gets a boost from constant AI improvements outside of the crypto space. AI projects themselves have produced only limited products, but their tokens benefit from a long trading history and relatively high liquidity. 

Tokens with the AI narrative often have a choppy performance with corrections, dramatic rallies, and breakouts that still attract traders. The sector is in a surge in late August, as the AI index returned to positive gains in the past week. The current market conditions also invite caution, as the market may shift direction again after the announcement of Nvidia’s earnings. 

The AI narrative also performed the best compared to other token groups for the past week . On a yearly basis, AI had moderate gains until now, as the tokens still have to offset the crashes during Q3. At this stage, AI is a narrative that suggests a rollover of gains from other token groups, leading to a larger recovery. Social media shilling for niche AI tokens has also accelerated in the past week to ride on the general trend of the leading tokens. 

Will Nvidia benefit the crypto market? 

In the past month, the crypto AI recovery tracked the gains of NVDA shares, which rallied from $98.12 to $129.20. NVDA has gained more than 130% in the year to date, outperforming other traditional assets.

The latest NVDA stock moves hinge on positive revenues and earnings predictions, with a 112% growth of sales and up to 139% quarterly earnings growth compared to 2023. For that reason, the majority of analysts see NVDA as either a strong buy or hold. 

The price of NVDA is not an absolute predictor of crypto moves, but it has a relatively strong overlap with Bitcoin’s (BTC) performance. The last price moves for BTC and NVDA suggest both assets are closely tied to bullish attitudes and overall investor confidence. 

The NVDA price has performed in a manner even more volatile than crypto. In this case, NVDA is the main driver, which may predict some of the exuberance in the crypto market. 

NVDA shares are also facing the month of September, seen as a traditional time for corrections, but especially to semiconductor stocks. However, NVDA is also making unpredictable moves and some see the asset as retaining its strength. 

The biggest value bid of crypto AI projects is the building of GPU-based infrastructure. GPU power for renting and training AI models is also used as a diversification tool for miners. The GPU as a service market is still in its initial stage, with an estimated size of $3.23B in all of 2023. In the next few years, the market is expected to expand to $10B, branching out into financial analysis, 3D rendering, animation, video editing or research tasks. 

Crypto-based AI projects are handling some of those tasks, with a focus on trading, image creation, animation and rendering, and video sharing. The GPU as a service trend builds on other crypto-based distributed solutions, such as decentralized storage space. 

Cryptopolitan reporting by Hristina Vasileva