- Nvidia’s stock price is now below an important level after a major drop of $600 billion this week.
- The drop in interest is due to worries from investors about DeepSeek, a new AI model from a Chinese company.
- Nvidia’s next key event is expected to be its earnings report on February 26.
Nvidia stock is struggling as it falls below an important point for the first time since January 2023.
Shares of the graphics card company dropped 16% this week after investors became worried about a new AI model from the Chinese startup DeepSeek.
The drop caused Nvidia to lose almost $600 billion in value in just one day, bringing the stock down to its 200-day average price.
That threshold is a closely watched technical sign that helps identify the long-term direction of a trend. When stock prices drop below their 200-day moving average, it signals to buyers that the upward trend may be about to change direction.
Nvidia stock finished below its 200-day moving average on Monday, jumped back above it on Tuesday and Wednesday, but then fell back below it during Thursday’s trading session.
On Thursday, the stock was priced at $119.70, which is less than its average price over the past 200 days, which is $122.28.
The constant ups and downs in trading around a key point indicate that Nvidia’s performance is at a crucial stage this week.
Will Tamplin, a senior expert at Fairlead Strategies, said that Nvidia’s recent drop in price signals that more problems might be coming.
“NVDA is currently testing its 200-day moving average, which is around $122.” Tamplin told Business Insider in an email that the decline is expected to continue, possibly reaching a secondary support level of about $110.
Tamplin mentioned that Nvidia stock is expected to decline in the next two to four months. He noted that the stock hasn’t reached a point where it is considered low, indicating that it may drop further.
“Looking ahead, momentum has decreased since mid-2024, which suggests that the main upward trend may get weaker or shift to a more stable trading range in 2025,” Tamplin said.
David Keller, the chief strategist at Sierra Alpha Research, told BI that Nvidia’s drop is important because the stock has been trading within the same band since early November.
Keller noted that it’s worrying that there hasn’t been any quick buying of Nvidia stock after its drop on Monday.
“Instead of many buyers driving NVDA’s price back into the earlier trading range, the price has mostly stayed within the limits set on Monday,” Keller wrote. “Unless NVDA can reach $130 again, we will view this chart as problematic.”
Ari Wald, the head of economic analysis at Oppenheimer & Co., stated that Nvidia stock probably won’t start going down right away, nor is it expected to keep rising like it has for the past two years.
Instead, Wald told BI that the stock should enter a sideways stabilization phase going forward.
“Wald said in an email that when a stock stops going up strongly, it usually stays in a stable range instead of going down. So, it would be normal for the stock to change a bit around its average price over the next few weeks or months.”
Wald sees $140 as a point where the stock might struggle to rise and $100 as a point where it could have strong support.
He believes that Nvidia will eventually start to rise in value again in the long term. However, he suggests that buyers should hold off on buying the stock until they see signs of that upward trend returning.
Wald said that taking a careful approach is wise while the stock market adjusts from earlier highs during the present period.
Ryan Detrick, the chief market analyst at Carson Group, said that although Nvidia’s drop this week is noticeable, it is hiding the general strength in the wider market.
“The expectations are high, and Nvidia and other chip companies need to show strong profits to support their current stock prices,” Detrick told BI. “Ultimately, rotation is essential for a bull market. Moving investments from tech companies to sectors like transportation and finance might not be a bad thing,” he added.
Also Read : Tigress Financial Has Upgraded Nvidia’s Rating to ‘strong Buy’ and Raised Its Price Target to $220
Nvidia will have the opportunity to show investors that its high stock value is justified when it shares its earnings report after the market closes on February 26.
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