- NVIDIA stock has dropped by over 16% from its all-time high.
- The stock has formed a giant bullish flag pattern, pointing to a rebound.
- NVIDIA has become one of the cheapest companies in Wall Street.
NVIDIA stock price has dropped by over 16% from its highest point last year despite its business firing on all cylinders. NVDA was trading at $177 on Monday, with its valuation staying at $4.31 trillion. This retreat could be the calm before the storm as a bullish flag pattern emerges.
NVIDIA Stock Price Has Formed a Bullish Flag Pattern
The three-day chart shows that the NVDA stock price has slowly formed a highly bullish chart pattern, which may lead to more gains in the coming weeks.
This chart shows that it has slowly formed a descending channel and is now slightly above the lower side. This channel formed after the stock surged from a low of $86 in April last year to a record high of $212. It has now formed a bullish flag pattern, which often results into a strong bull run.
NVIDIA stock has remained above the 100-day Exponential Moving Average, which has provided it with substantial support since April last year. It also remains above the Major S&R Pivot Point of the Murrey Math Lines tool at $150.
Therefore, the stock will likely have a strong bullish breakout in the coming weeks. If this happens, the next key target to watch will be at $195, the upper side of the descending channel. A move above that level will point to more upside, potentially to the extreme overshoot of $225.
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NVIDIA Has Major Catalysts Ahead
The ongoing NVDA stock price retreat comes at a time when the company has major catalysts ahead. First, the most important one is that it has become one of the most undervalued companies in Wall Street.
Data shows that the company has a forward PE ratio of 21, which is slightly above the S&P 500 Index average of 19. The company has a forward PEG ratio of 0.56, much lower than the sector median of 1.32.
The cheap valuation comes at a time when the company’s growth is firing on all cylinders. Wall Street analysts expect the upcoming financial results to show that the company’s revenue jumped by 78% in the first quarter to over $78.7 billion, while its annual figure will be $369 billion, up by 72% YoY.
NVIDIA’s real numbers will be much better than its estimates because these numbers don’t include the Chinese business. The company will likely start selling its chips to China, possibly after Donald Trump visits the country in May.
Additionally, NVIDIA’s estimates don’t include its new CPU business, which it aims to become a major disruptor to companies like Intel and AMD.
Wall Street analysts believe that the company has more upside in the coming months, with the average estimate being $268, up sharply from the current $177. The most recent upgrade came from Piper Sandler, which maintained an overweight position.
The next important catalyst for the NVDA share price will be the upcoming earnings by companies like TSMC and ASML. It will also react to the upcoming results by companies like Microsoft, Google, and Amazon.
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