Nvidia (NVDA), the dominant force in AI-driven semiconductor technology, has faced significant headwinds in early 2025. The stock has declined 10% year-to-date, weighed down by investor concerns over exposure to China amid ongoing trade tensions and the potential risks of AI infrastructure overcapacity. Additionally, Nvidia’s cautious margin outlook for the first quarter has done little to assuage market fears.
Technical Breakdown: Bearish Signals Emerge
From a technical standpoint, Nvidia has fallen below its key 50-day, 100-day, and 200-day moving averages, signaling a loss of momentum among traders. The stock’s position relative to these trend indicators suggests that bearish sentiment is currently dominant.
Veteran technical analyst Ross, who has been recognized as the top market technician by Institutional Investor for seven consecutive years, highlights that Nvidia’s Relative Strength Index (RSI) has dropped to 47, significantly lower than the 63 level seen during the stock’s peak in early January following CEO Jensen Huang’s keynote at the Consumer Electronics Show. The RSI, which measures the speed and magnitude of recent price changes, suggests that NVDA is approaching oversold territory, potentially setting the stage for a near-term rebound.
“I think the next move is up in Nvidia,” Ross stated, indicating that the stock may be nearing a technical support level that could prompt buying interest.
Catalysts for a Potential Rebound
Despite recent weakness, key upcoming events could provide a catalyst for Nvidia’s stock to regain traction. The most significant near-term event is CEO Jensen Huang’s keynote at the company’s annual GTC conference on March 18, followed by a financial analyst meeting on March 19.
- Market participants will closely monitor several factors at these events, including:
- Next-Generation Chip Performance: Investors will be keen to see how Nvidia’s upcoming Rubin architecture compares to the current Blackwell series, which is the gold standard in AI computing.
- AI Market Outlook: With concerns rising over AI infrastructure overbuilding, clarity on the total addressable market (TAM) will be critical to easing investor uncertainty.
- China Strategy: Given the ongoing U.S.-China trade tensions, any insight into Nvidia’s contingency plans—including potential offsets for lost revenue in China—will be closely scrutinized.
Fundamental Valuation & Analyst Perspective
Despite near-term headwinds, some analysts view Nvidia’s current valuation as an attractive entry point. Bank of America analyst Vivek Arya argues that market volatility and geopolitical risks may create short-term pressure, but Nvidia’s fundamentals remain robust.
He notes that Nvidia is now trading below its historical trough price-to-earnings (P/E) ratio of 25x, suggesting that the stock may be undervalued relative to its long-term growth potential. Arya maintains a Buy rating on Nvidia with a $200 price target, implying 68% upside from current levels.
Final Thoughts
While Nvidia remains under technical pressure, oversold conditions and key upcoming catalysts could set the stage for a potential rebound. Investors should closely monitor momentum signals, RSI levels, and upcoming corporate updates to assess whether NVDA is approaching a bottom or if further downside risk remains.
Key Takeaways:
- Nvidia has broken below key moving averages, signaling a loss of momentum.
- RSI indicates potential oversold conditions, suggesting a near-term bounce.
- GTC 2025 and analyst meeting could provide crucial fundamental insights.
- Valuation remains attractive, with analysts projecting significant upside.
Will Nvidia rebound from current levels, or is further downside ahead?
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