Nvidia's Stock Selloff: $150 Support Level in Focus Ahead of Earnings

Nvidia's stock has broken a clean uptrend channel and struggled to gain traction in recent weeks. With Q2 earnings on Wednesday, investors should watch closely for a technical breakdown. The stock has broken a months-long stretch of steady higher highs and higher lows. The $150 level is key, representing Nvidia's late-2024 highs and a major long-term support zone. A decisive break below $150 would erase a year's worth of gains and signal a deeper technical correction.

Nvidia Corporation (NVDA) stock has recently deviated from its clean uptrend channel, struggling to gain momentum in recent weeks. Investors are closely watching the company's Q2 earnings report, scheduled to be released after the market closes on Wednesday, August 27. The stock's break from a months-long stretch of steady higher highs and higher lows has raised concerns about a potential technical breakdown.

The $150 level is a critical support zone for Nvidia, representing its late-2024 highs. A decisive break below this level would erase a year's worth of gains and signal a deeper technical correction. Analysts are divided on the stock's prospects, with some citing robust AI demand and eased U.S.-China trade restrictions, while others warn of potential overbought conditions and geopolitical risks.

Wall Street analysts have set a median 12-month price target of $191.78 for Nvidia, driven by AI demand and eased U.S.-China trade restrictions [3]. However, technical indicators like the Relative Strength Index (RSI) at 71 and a price-to-earnings (P/E) ratio of 56.50 suggest overbought conditions and potential correction risks [3]. The stock has surged 90% since April, reaching a Strong Buy consensus rating with a 12-month average price target of $198.97, indicating a 12% upside [1].

Despite the robust outlook, Nvidia faces potential headwinds from China export curbs, which could result in an $8 billion hit [1]. The company has reportedly told suppliers to suspend production of its H20 chip due to security concerns raised by Beijing [1]. This move is expected to impact the company's revenue, particularly in its data center business, which has been a primary growth engine.

In conclusion, while Nvidia's strong product portfolio and leadership in AI make it a compelling investment opportunity, investors should closely monitor the company's earnings report and the potential impact of China export curbs. The upcoming Q2 earnings report will be crucial in determining the next stage of the present bull market, with the $150 level acting as a key technical support zone.

References:
[1] https://finance.yahoo.com/news/nvda-buy-nvidia-stock-aug-192124545.html
[2] https://www.ainvest.com/news/ubs-raises-nvidia-price-target-205-q2-earnings-2508/
[3] https://www.investopedia.com/what-wall-street-analysts-think-of-nvidia-stock-ahead-of-earnings-wednesday-11796072