Nvidia Slumps on Marvell Deal as Skepticism Weighs

Nvidia (NVDA) opened down nearly 3.1% in pre-market trading on Wednesday, falling to $170.26 and trading below its previous close of $175.75. The sharp decline came as the market absorbed recent news of a new partnership and investment, alongside broader concerns over AI infrastructure growth and valuation levels.

The broader market was also in a downtrend, with the Nasdaq futures down 2.05% and S&P 500 futures down 1.61%. The sell-off in tech stocks, including a mega-cap like Nvidia, suggests investors are cautious about the path forward for AI-driven growth stories.

Why is the stock moving today?

Nvidia is currently in the spotlight after announcing a strategic partnership with Marvell, a deal that includes a $2 billion investment from Nvidia. The partnership aims to link Marvell’s infrastructure with Nvidia’s AI factories and AI-RAN ecosystem, which could provide more flexibility in next-generation infrastructure solutions. While this deal is a significant step for Nvidia’s AI ambitions, the market has been mixed in its reaction.

On the surface, this partnership is bullish for Nvidia, but the immediate price action tells a different story. The stock is now below key moving averages (MA20 at $178.29 and MA50 at $182.82), and the RSI of 38.1 suggests a bearish bias. Investors appear to be pricing in uncertainty around the pace of AI infrastructure adoption and the company’s ability to execute on these ambitious plans.

What supports or weakens this move?

The technical picture is mixed. The stock is in a clear downtrend, as defined by its moving averages and the RSI. However, the move today appears to lack strong volume support. The volume today is at 79.9 million shares, which is well below the 20-day average of 182 million and 60-day average of 219 million. This weak volume could suggest the sell-off is more of a short-term correction than a bearish reversal. That said, the price is in the lower end of its 60-day range and near key support levels. If the stock can hold above $170, it may retest the 20-day moving average and potentially find buyers. However, a break below $170 could trigger a larger pullback toward the 60-day low of $164.27.

The key uncertainty is whether this is a short-term dip or the start of a more meaningful selloff. While the partnership with Marvell should be a positive catalyst over the long term, the market is clearly taking a wait-and-see approach. Until there is stronger volume and clearer follow-through, the bearish trend is likely to remain in place.

What levels or signals should readers watch next?

Investors should keep a close eye on $170, the nearest key support and resistance level. If the stock breaks below this level, it may trigger a larger sell-off toward $164.72, which is one ATR below the current price. On the other hand, a bounce above $170 could signal a temporary pause in the downtrend and a potential test of the 20-day moving average.

Crucially, volume will be a key factor. A sharp increase in volume on a reversal could signal that sellers are exhausting, while continued thin volume could indicate that the move is still in early stages. If volume picks up on the upside, it may suggest that the market is beginning to accept the Marvell partnership as a meaningful long-term catalyst.

Investors should also watch the broader Nasdaq and S&P 500 for signs of a wider market bounce. If the broader indices begin to stabilize, it could provide a floor for Nvidia and reduce selling pressure. Conversely, a continued decline in the broader market could weigh on Nvidia for the foreseeable future.

At the end of the day, Nvidia remains a key player in the AI infrastructure space, and this partnership is likely to be an important part of its long-term strategy. However, the near-term outlook is still clouded by questions about AI adoption, execution risks, and valuation. The stock is at a critical juncture, and the next few trading days will be important in determining whether this is a short-term correction or the beginning of a new downtrend.

Readers should monitor both price and volume behavior around $170 and keep an eye on the 20-day and 50-day moving averages as potential turning points. As always, these are not investment recommendations, but rather analytical observations for informed decision-making.