NVIDIA stock price violently fluctuates, analysts say it may touch further downside support levels
NVIDIA's stock price has dropped by 23% and may further decline. Investors are withdrawing from large-cap tech stocks and turning to small-cap companies with lower valuations. The stock price has fallen below the 100-day moving average, indicating a downward trend. NVIDIA needs to reset expectations and attitudes to regain enthusiasm
According to Zhitong Finance, the recent price trend reversal of NVIDIA (NVDA.US) highlights a risk - from a key indicator, NVIDIA's volatility is about twice that of Bitcoin. In the case where NVIDIA's stock price only rises and does not fall, this risk is not significant; but in the case of significant fluctuations, the recent decline in NVIDIA's stock price indicates that the stock may have further downside potential.
Since July 10th, NVIDIA's stock price has fallen by 23%. Although there has been a slight pullback in the stock price this month, NVIDIA's year-to-date increase is still around 109%, exceeding any stock in the S&P 500 index components except for Super Micro Computer (SMCI.US). Super Micro Computer is another company benefiting from the investment boom in artificial intelligence application devices.
However, in the past two weeks, investors have been withdrawing from large tech stocks such as NVIDIA, as there is increasing doubt whether all spending on artificial intelligence will pay off. Instead, they are reallocating funds to small-cap companies with lower valuations, which will benefit once the Fed starts cutting interest rates. NVIDIA's stock price fell 7% on Tuesday, marking the largest drop in over three months, with a market value evaporating by $193 billion.
A measure used by technical analysts who track trading patterns also indicates that this shift is pushing NVIDIA's stock price towards a threshold that may indicate further downside potential. The stock closed at $103.73 on Tuesday, slightly below the 100-day moving average of $103.81, which may signal a downward trend for the stock.
Todd Sohn, ETF and technical strategist at Strategas Securities, said: "This is more painful than NVIDIA's usual trend over the past 8 months. It's not fun when the best stocks correct like this. But to reignite some enthusiasm for NVIDIA and its peers, this is a necessary condition - to some extent, a reset of expectations and attitudes - which will ultimately be helpful."