Nvidia's 3.4% Plunge: Alibaba's AI Chip and Sector Weakness Spark Turbulence

Summary
• Nvidia (NVDA) plunges 3.4% to $173.98, breaking below its 200-day moving average of $138.62
• Alibaba's AI chip development and Marvell's weak forecast weigh on semiconductor sentiment
• Options volatility surges, with 175-strike call options seeing 58.79% price decay

Nvidia's sharp intraday decline reflects a confluence of sector-specific pressures and macroeconomic jitters. The stock's 3.4% drop to $173.98—a 52-week low of $86.62—has drawn attention as Chinese tech rivals challenge its AI dominance and peers like AMD also falter. With the 200-day moving average acting as a critical support level, traders are recalibrating positions amid a volatile options landscape.

Alibaba's AI Chip and Sector Weakness Trigger Sell-Off
Nvidia's 3.4% intraday drop stems from a dual threat: Alibaba's development of a next-generation AI chip and a weak earnings forecast from semiconductor peer Marvell Technology. The Chinese tech giant's advancement in AI hardware directly challenges Nvidia's market share in the region, while Marvell's subdued guidance signals broader sector caution. These factors, combined with Nvidia's own decelerating revenue growth and inventory concerns, have triggered profit-taking and risk-off sentiment. The stock's proximity to its 52-week high of $184.48 amplifies sensitivity to negative catalysts.

Semiconductor Sector Under Pressure as AMD Mirrors NVDA's Slide
The semiconductor sector is broadly under pressure, with Advanced Micro Devices (AMD) mirroring Nvidia's decline. AMD's -3.45% intraday drop underscores sector-wide vulnerability to AI competition and macroeconomic headwinds. While Nvidia's AI dominance remains intact, the sector's collective struggle with inventory management and slowing demand—exacerbated by U.S.-China tech tensions—has created a risk-off environment. Investors are now scrutinizing earnings quality across the sector, with both companies facing pressure to demonstrate sustainable growth trajectories.

Options and ETF Plays for a Volatile NVDA Landscape
• 200-day MA: $138.62 (below current price)
• RSI: 44.32 (neutral)
• MACD: 2.73 (bullish divergence)
• Bollinger Bands: $174.08 (lower band) to $185.27 (upper band)

Nvidia's technicals suggest a short-term bearish bias but long-term bullish momentum. Key levels to watch include the 200-day MA at $138.62 and the Bollinger Band lower bound at $174.08. The RSI at 44.32 indicates neutral momentum, while the MACD's 2.73 value hints at potential divergence. For options traders, the NVDA20250905C175 and NVDA20250905C177.5 contracts stand out:

• NVDA20250905C175: Delta 0.476, IV 29.49%, leverage 63.58%, theta -0.610, gamma 0.0523
- High leverage and moderate delta position this call for a 5% downside scenario (target price $165.28), with a potential payoff of $10.28 per contract
• NVDA20250905C177.5: Delta 0.347, IV 28.84%, leverage 103.09%, theta -0.479, gamma 0.0496
- Strong gamma and leverage make this ideal for a rebound above $177.50, with a 5% downside payoff of $12.31 per contract

Aggressive bulls may consider NVDA20250905C175 into a bounce above $175, while short-term bearish plays could target the 200-day MA breakdown.

Backtest Nvidia Stock Performance
Thanks for waiting—your back-test is ready. Please review the interactive report below for full statistics, trade list and charts.Key assumptions (auto-filled):• Event definition: a trading day where NVDA’s closing return ≤ −3 % versus the prior close. • Entry time: end-of-day close on the signal date. • Exit rule: close the position at the end of the 5th trading day (max holding days = 5). • Sample period: 2010-01-01 → 2025-08-29 (full available history). These defaults follow standard event-study practice; let me know if you'd like different thresholds or holding periods.Explore the module and tell me if any refinements are needed!

NVDA at Crossroads: Defend $174 or Test $138.62?
Nvidia's near-term trajectory hinges on its ability to hold above $174.08, the lower Bollinger Band, and the 200-day MA at $138.62. A breakdown below $174 could accelerate selling, while a rebound above $175.50 may reignite bullish momentum. Sector leaders like AMD (-3.45%) highlight the broader semiconductor vulnerability, making earnings quality and AI adoption rates critical watchpoints. Investors should prioritize liquidity-rich options like the 175-strike call and monitor Alibaba's AI chip progress. If $174.08 breaks, NVDA20250905C175 offers short-side potential.