What happened

Week to date, shares of Nvidia (NVDA 2.57%) were up 7% as of 11:20 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence. Nvidia's return outperformed the Nasdaq Composite's return of 2.6% over the last week. 

A new partnership with Oracle gave Nvidia a much-needed boost. The stock has fallen 58% year to date over concerns about weakening demand across the semiconductor industry.  

So what

On Tuesday, Oracle and Nvidia announced an expanded partnership to power Oracle's cloud infrastructure with the A100 and upcoming H100 graphics processing units (GPUs). It's a testament to Nvidia's growing competitive position in accelerated computing with its solutions covering chip hardware, systems, and software.

Oracle will add "tens of thousands" more Nvidia GPUs. Nvidia CEO Jensen Huang noted that the growing demand for its high-powered chips and artificial intelligence (AI) technology go beyond the obvious demand for faster computing performance. "Accelerated computing and AI are key to tackling rising costs in every aspect of operating businesses," Huang said. 

This can partly explain why Nvidia's data center business has been relatively strong year to date, growing 71% in the first half of the year. Nvidia leadership status in this important market for the global economy is why the stock is still worth holding for the long haul.

Now what

There are low expectations for growth right now, so investors will be looking to what management says about 2023 demand in the upcoming earnings report on Nov. 16. The stock's decline this year stems from a slowing gaming and PC market, and analysts are increasingly concerned about a potential slowdown in data center spending going into 2023.

Last week, Bank of America analyst Vivek Arya cautioned that the slowing growth for semiconductors is likely to spread from the consumer end of the market (e.g., PC shipments) to enterprise and data centers. 

On a positive note, Arya also suggested that valuations are starting to look attractive for chip stocks, which implies that a bottom could be getting closer.