Nvidia's stock experienced a decline on Thursday, even as the AI chip manufacturing giant announced earnings and revenue figures that surpassed analyst projections. Although the overall results were marginally better than anticipated, sales within the data center division, a primary revenue source for the company, fell slightly short of Wall Street's forecasts. Furthermore, the company's guidance for the upcoming quarter, which notably excludes revenue from H20 chip sales to China due to export uncertainties, also left some investors underwhelmed. This reaction stems from a prevailing expectation among market participants that Nvidia consistently outperforms its own forecasts.
Following a recent all-time high achieved earlier this month, Nvidia's shares have largely traded horizontally, signaling investor caution in anticipation of the chipmaker's latest earnings report. Technical indicators like the relative strength index, while remaining in a bullish zone before the earnings release, showed a consistent pattern of lower highs since mid-July, suggesting a weakening momentum in buying interest. This sideways movement indicates a period of consolidation as the market digests new information and assesses future prospects for the stock.
In the event of a continued decline post-earnings, investors should monitor critical support thresholds. The initial key support level is around $174, a price point that has previously attracted significant buying interest, aligning with a mid-July peak and a minor correction last week. Should the stock fall below $174, the next significant support level to watch is $159, which corresponds to the June high before a brief dip and subsequent rebound. A further downturn could lead shares to test the $150 mark, a strong support area established by multiple peaks between November and January. This level is particularly noteworthy as it aligns with a downside projection based on past profit-taking patterns, offering insights into potential future price movements.
Conversely, if Nvidia's shares regain upward momentum and resume their long-term growth trajectory, the $183 area will become a crucial resistance level. This price point, close to the stock's recent record high, is likely to capture considerable attention from investors. The path forward for Nvidia's stock will depend on how these key support and resistance levels hold up against prevailing market sentiment and future developments in the AI chip market.