NVIDIA Stock is Stuck in a Correction: Will it Hit $150 or $200 First?

NVIDIA stock price is stuck in a correction after falling by 16% from its highest level in October. It dropped to a low of $178 on Tuesday, its lowest level since December 19. This article explores whether the stock will drop to $150 or first rebound to the key resistance level at $200.

NVIDIA Stock Price Technical Analysis Suggests That it May Hit $150 First

The daily timeframe chart shows that the NVDA stock price peaked at a record high of $212 in October last year and then started moving downwards.

It has moved below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears are gaining control for now.

Most importantly, the stock’s Supertrend indicator has turned red, and it has formed a risky head-and-shoulders pattern. The head is at an all-time high of $212, while the left and right shoulders were at around $190. Its neckline was at $170.

Therefore, the stock will drop to the key support level at $150 first before $200. $150 is an important support level since it aligns with the 50% Fibonacci Retracement level and is about 15% below the current level.

In the long-term, however, the NVDA stock price will rebound and move to an all-time high.

Jensen Huang Travels to China as He Insists That GPUs are Sold Out

The NVIDIA stock price continued to fall this week as the broader market plunged amid ongoing geopolitical tensions between the United States and European countries.

It also dropped after reports emerged that China had blocked sales of H200 to the country. That would be a big blow for the company as it has received orders of over 2 million chips valued at over $54 billion.

It is against this backdrop that Jensen Huang is considering a visit to Beijing to talk to its leaders this month. According to Bloomberg, he plans to attend events ahead of the Lunar New Year.

A potential deal between Huang and Chinese officials would be a big deal for the company as data shows that there is robust demand for its chips.

Meanwhile, Huang has noted that its GPUs are now sold out across the cloud and that GPU rental prices are soaring.

This statement, along with TSMC’s recent earnings, indicates that demand for these chips is still rising.

NVIDIA Earnings to Show Resilient Growth

Indeed, even excluding the sales to China, analysts believe that the company’s revenue growth will continue this year.

Data compiled by Yahoo Finance shows that its fourth-quarter revenue will be $65.50 billion, up by 66% from a year earlier. This revenue will bring the annual revenue to $213 billion, up by 63.4% from 2024.

The data also shows that the revenue will rise by 51% this year to $322 billion. Odds are that its revenue will be much better than estimates, as it has always done in the past.

The company’s profitability will also continue to rise as GPU prices rise. Analysts expect 2024 earnings per share to reach $4.69, followed by $7.63 in 2026.

Most importantly, the company has become highly undervalued. Data shows that the forward price-to-earnings ratio has dropped to 37, well below the five-year average of 45.

Summary

NVIDIA has some of the best fundamentals in Wall Street, with its revenue and profitability growth accelerating. It has also become a bargain compared to its past.

However, technical analysis suggests that the NVIDIA stock price will be volatile in the near term as investors wait for big tech earnings, which begin next week. It will also waver as investors wait for the potential deal on sales of H200 chips to China.