Nvidia Stock Hits Resistance: What to Expect After Recent Price Movements

Nvidia Stock Analysis – Nvidia (NVDA) faced challenges breaking above the 50-day moving average on Wednesday morning, following a strong performance the previous week. Despite clearing this level on Thursday, Nvidia’s stock fell below it again this week. However, the stock presents a potential trendline entry around $118, just above the 50-day moving average. Trendline entries can offer early buying opportunities but come with increased risk.

Recent Stock Gains and Market Sentiment

Nvidia’s stock surged 16% last week, recovering from a 14% loss the prior week. Despite this, determining the right time to buy Nvidia stock remains complex, even for a market leader. Technical indicators and chart signals can assist investors in deciding if it’s a good time to buy Nvidia.

Salesforce Collaboration and White House Meeting

On Wednesday, The Wall Street Journal reported that Salesforce (CRM) will partner with Nvidia to develop “autonomous agent experiences” using AI on Salesforce’s platform. Additionally, Nvidia CEO Jensen Huang and OpenAI CEO Sam Altman met with White House officials to discuss AI infrastructure spending. This meeting also included executives from Alphabet (GOOGL), Amazon.com (AMZN), and Microsoft (MSFT). The White House announced an interagency task force to expedite data center setups.

Diversification Concerns and Market Reactions

News emerged that companies might be diversifying their chip needs, potentially impacting Nvidia. Saudi oil giant Aramco is considering using chips from startup Groq to provide AI computing power to local companies. This news contributed to Nvidia’s stock pressure on Monday. On September 3, Nvidia experienced a sharp drop below the 50-day moving average, marking its largest single-day market cap loss for any U.S. company, with the market cap now below $3 trillion.

Nvidia’s Financial Performance and Market Outlook

Nvidia reported earnings surpassing Wall Street expectations, with sales of $30.04 billion, exceeding the anticipated $28.7 billion, and showing a 122% increase from the previous year. Earnings per share (EPS) came in at 68 cents, higher than the expected 65 cents, and up 152% year-over-year. Nvidia projected higher sales for the current quarter at $32.5 billion compared to the expected $31.7 billion.

Analysts’ Views and Future Prospects

Analysts at Bernstein noted that while Nvidia’s growth has been impressive, sustainability is a key concern, though it is not an immediate worry. Trading firm QCP Capital highlighted that the Fed’s decision would have significant medium- to long-term effects on financial markets. Meanwhile, analysts at Morgan Stanley maintained an overweight rating on Nvidia, with a price target of $150, despite concerns over declining gross margins being deemed “overblown.”

Impact of AI Product Demand and Stock Performance

Nvidia’s stock performance in 2023 and 2024 has been significantly influenced by earnings reports and the growing demand for AI chips. The company has seen a 239% increase in 2023, despite a 5.3% drop in July. Nvidia’s stock has risen nearly 140% so far this year. Its EPS rating remains ideal at 99, and it holds a Composite Rating of 97.

Evaluating Nvidia Stock: Is It a Buy?

Nvidia’s current struggle to regain the 50-day moving average presents an opportunity for an aggressive entry if the stock rebounds above this level with strong volume. The stock is also approaching a trendline entry and offers a significant buy point at $140.76, which is its all-time high. Evaluating chart patterns and market conditions will be crucial for deciding whether to invest in Nvidia.

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