NVIDIA stock price rose by 1.2% on Wednesday as the US equities market rebounded after suffering a major drop in the past two days. NVDA stock was trading at $180, down sharply from the all-time high of $212. Still, technicals suggest that it may crash to $128 in the coming weeks as the earnings season continues.
NVIDIA Stock Price Technical Analysis Points to a Crash
The daily timeframe chart shows that the NVDA stock price peaked at an all-time high of $212 and then pulled back to the current $180.
It has continued to underperform the broader stock market as the top indices like the S&P 500 and the Nasdaq 100 are hovering near their all-time highs. Other popular AI stocks like Adobe, Salesforce, and ServiceNow have all plunged recently.
The chart shows that the stock has formed the highly bearish pattern known as the head-and-shoulders. In this case, the head is at the all-time high of $212, while the shoulders are at $192.
The stock is now nearing the neckline for this pattern at $170, which coincides with the lowest level in July, September, November, and December last year.
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The price target in a head-and-shoulders pattern is estimated by measuring the distance from the head and the neckline, and then the same distance from the neckline. In this case, this distance brings the target to $128x which is about 30% below the current level.
The bearish Nvidia stock price forecast will become invalid if it moves above the key resistance level at $192, which is the right shoulder.
Nvidia’s Crash Could be a Good Buying Opportunity
There are signs that the potential Nvidia stock price crash would be a good buying opportunity, as the company has numerous catalysts. For one, as the chart below shows, the consensus estimate among analysts is $263, which is a 48% increase from the current level. 12 months ago, the target price among analysts was $164.
The most important catalyst for the Nvidia stock price is that the company is seeing strong demand for its GPUs, which are used widely to train AI models by companies like OpenAI and Anthropic.
In a statement at the World Economic Forum, the company’s CEO noted that all GPUs were now sold out, even as Taiwan Semiconductor continues to boost its production.
The tight supply conditions mean that Nvidia has the pricing power, which explains why analysts expect its revenue and profitability growth to accelerate. Data shows that the average estimate is that its annual revenue rose by 64% in 2024 to $213 billion. The estimate for this year is that its revenue will grow by 51% to $322 billion, a trend that will continue in the coming years.
At the same time, the company has become a bargain, with its forward price-to-earnings ratio falling to 37, much lower than the five-year average of 45.50.
In contrast, Tesla, a company that is no longer growing, has a forward PE ratio of 256, while Palantir has a multiple of 232. Amazon has a multiple of 32. NVIDIA is growing faster than these companies and has higher margins, meaning that it deserves a premium valuation.
At the same time, the company has a potential catalyst in that it may restart selling its H200 chips there. According to Reuters, the company has received orders of 2 million chips with a market value of over $54 billion.
Additionally, Nvidia is much further ahead of its potential competitors like AMD, MetaX, and Intel. One of its main advantages is the Compute Unified Device Architecture (CUDA), which allows developers to use its GPUs for general-purpose computing. CUDA has the biggest market share, which is hard to replicate.
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