Nvidia Corp. is on track for its first close below a key technical level since May as investors continue to rotate out of the leading maker of artificial intelligence chips.
The stock fell as much as 4% to $167.22 on Tuesday, set for a fourth straight negative session and dropping below its 50-day moving average of $171.02. Breaking under this closely watched level is seen as a negative sign of near-term momentum trends.
“This shows how the momentum has broken down, and it makes me concerned about the stock over the short term,” said Buff Dormeier, chief technical analyst at Kingsview Partners, referring to the 50-day moving average.
Dormeier sees $160 as the next level of support for the stock, followed by $145, a level that preceded a breakout in June. “If it breaks under $145, I’d be really concerned about its prospects,” he added.
Shares of the chipmaker slumped along with the broader equity market as concerns mount over geopolitics and lofty valuations. Despite the four-day drop of more than 7% — which has erased more than $340 billion off Nvidia’s market capitalization — recent performance has trended to the upside.
The stock remains up nearly 78% off an April low, and it is still the largest stock in the world by far, with a market value of about $4.1 trillion, compared with Microsoft Corp., which is in second place, at $3.72 trillion.
Last week, Nvidia gave a tepid revenue forecast that underlined investor concerns about the pace of spending on AI infrastructure. However, analysts stayed broadly positive, and growth trends at the chipmaker have kept its valuation in check. Based on the average price target, analyst see upside of more than 25% from current levels.
“There’s still long-term opportunity, but it seems like it has peaked for the short or intermediate term,” Dormeier said.
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