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Is Nvidia's Pullback an Opportunity to Buy?
$NVIDIA (NVDA.US)$, the AI chip giant, witnessed a significant drop at Monday's close, falling by 6.68% and registering its largest drop in two months. This downturn marks the third consecutive day of losses, with a cumulative decline of 12.88% over the span. Notably, just last Tuesday, Nvidia had surpassed $Microsoft (MSFT.US)$, clinching the title of the most valuable company by market capitalization.
What Could Have Caused the Consecutive Decline?
• Nvidia Insiders Selling
The recent pattern of consistent sales by Nvidia executives and directors has garnered attention by investors. In a notable disclosure, CEO Jensen Huang sold 720,000Nvidia shares between June 13 and June 21, amounting to a total of $94.6 million, achieving an average price of $131.44 per share. CFO Colette Kress liquidated 100,000 shares for an estimated $12.7 million last week. Additional significant transactions include Director Mark A. Stevens' sale of 470,000 shares for approximately $58.3 million on June 11, and Director Tench Coxe parting with 100,000 shares for close to $119.5 million on June 7.
• "Triple Witching Day" Intensifies Market Fluctuations
Last Friday witnessed a substantial volume of option expirations due to the "Triple Witching Day," leading to an increase in market trading activity. The concurrent expiration of these options, alongside the customary index rebalancing and adjustments in ETFs, has been a contributing factor to the amplified volatility in the market. Nvidia's stock experienced an intraday drop of around 5% on that day. Statistics revealed that out of the $5.5 trillion worth of various securities derivatives expiring on Friday, those related toNvidia were the second most valuable, trailing only the S&P 500 index.
• Partial Profit-Taking by Investors
Nvidia has experienced a meteoric rise this year, propelled by the relentless demand for its chips, which are a mainstay in the artificial intelligence computing sector. Despite the recent declines,Nvidia's year-to-date increase remains a staggering 138.6%. From the interim low on April 19 to the post-stock split acceleration, culminating in Tuesday's peak market capitalization,Nvidia's share price has surged by 60%.
Traders Are Looking for Support Levels
Amid a massive $430 billion sell-off spanning three days, traders are increasingly turning to technical analysis in search of clues for Nvidia's potential bottom. Technical analysis, though not an exact science, can offer investors a valuable guide by examining historical trading patterns. Taking a technical perspective, Nvidia's stock price has entered its first technical correction since April, marked by a decline exceeding 10% from recent highs.
Buff Dormeier, the chief technical analyst at Kingsview Partners, points to the $115 zone as a pivotal Fibonacci retracement level. This tool is commonly utilized by technical analysts to determine potential support or resistance thresholds for equities and other assets. The 38.2% retracement fromNvidia's April intraday low to its peak last week hovers around 2% below the price at Monday's close. Dormeier suggests that there is short-term support near the $115 mark, with a subsequent significant threshold at $100.
Bruce Zaro, chief technical strategist at Granite Wealth Management,said that “For a stock in an uptrend likeNvidia, breaching that first level of support wouldn't be a concern." He added that a drop below $100, however, would be.
What Do the Analysts Say?
Wall Street optimists maintain that the recent market downturn represents a mere healthy correction, and have even proceeded to elevate the target price for Nvidia. Their confidence is primarily rooted in Nvidia's continued industry dominance, which is expected to potentially ignite a new industrial revolution. The rapid revenue growth, robust cash flow, and solid profits are cited as the sturdy pillars that underpin substantial stock price appreciation.
Jefferies analyst Blayne Curtis raised his target price onNvidia stock to $150 from $135, keeping a Buy rating andwrote in a research note on Sunday,
Nvidia is in control of the ecosystem on both the hardware and software front and their current cadence of new generations should make that lead only grow further.
"Nvidia's stock's steep climb...could make it vulnerable to near-term profit-taking. However, any volatility could be short-lived." BofA Securities analyst Vivek Arya wrote in his research note. He suggests that any resulting fluctuations are likely to be transient and maintains a Buy recommendation on Nvidia, with a target price of $150, highlighting the stock as a top pick.
However, the recent sustained surge in Nvidia's stock price has made some Wall Street professionals uneasy. They believe the stock has been overly hyped by the market. On Sunday, BTIG strategist Jonathan Krinsky issued a cautionary note in his report. He indicated thatNvidia's performance has not only surpassed that of any U.S. company during the late '90s tech bubble but also that its stock price is now approximately 100% higher than its 200-day moving average.
Since 1990, no American company has seen its stock exceed 80% above the 200-day moving average at the time it reached the status of the largest by market capitalization. The closest instance was $Cisco (CSCO.US)$in March 2000, when its stock was 80% above its 200-day moving average, a precursor to the peak of its share price.
Source: Bloomberg, MarketWatch
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Jensen Philanthropy : All in no regrats
Space Dust : steep declines are' healthy ' .
wall Street..
.
urm .
how many times have steep declines been healthy versus unhealthy, accordingly?
I mean , what movement of Nvidia would NOT be " healthy".
it's moves up, Good, it moved down.." healthy"
literally, this is for tards.. this logic..
Superjet : Writer holding lots of it
RideTheTide1906 : They are the leader in both hardware and software. They are also building a moat that forces buyers to obtain certain software for the hardware to run optimally. Most of the magnificent 7 rely on their chips as well. Not worried at all with the recent sell off.
DavidCCL : Moomoo have their own agenda. It only report those news in their favor I reckon. When MS downgraded AMD without adjusting the target price, moomoo reported. But when another analyst upgraded from $186 to $200, moomoo diam diam. Some news even after a few days are reported multiple times as though they are shooting the stock or buying PUT.... Anyway, anything for insiders to sell their stock when price is high? Am I wrong about Moomoo?
mrbw : Their Digital Twin and Omniverse are also somethings to watch out for.
BelleWeather : I certainly took advantage of that dizzying downturn…
Jensen Philanthropy Jensen Philanthropy : Buy now
阿美利嘉 : Do you think you really fell
? Do retail customers all over the world agree?
I think Wall Street Financial Institutions are putting pressure on share prices when they are taking advantage of falls and scooping chips!
I think it's 1-3 years:
The first target is 150 yuan
The second target position is 200 yuan
The third target is 300~400 yuan
This is my analysis of the needs generated by the world economy and AI system requirements and technological development potential.
102411937 : so BUY boat has left the port?![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")