Analysts predict NVIDIA’s stock might face challenges due to technical sell signals. Raymond James, a prominent U.S. financial services firm, observed that NVIDIA reached three critical technical points on July 29, hinting at a possible continued decline. The stock has already seen an approximate 8% drop during July.
One of these technical points involves a mechanical sell signal triggered by the MACD (Moving Average Convergence Divergence) indicator, a tool used to gauge price momentum. Also, Raymond James noted that the stock price has fallen below the crucial 50-day moving average, accompanied by trading volumes that suggest an onset of selling pressure.
“These three negative technical signals indicate that a medium-term correction phase (1-3 months) may be underway,” Raymond James analysts stated. They further pointed out that NVIDIA’s 50-day moving average is currently around $118 per share. A sustained closing price below this level could confirm the start of a new short-term correction phase.
Furthermore, they mentioned a potential scenario where the stock could “fill the gap” around $94, marking a 16.9% drop from the current price, should the downward trend continue.
NVIDIA has been one of the biggest beneficiaries amid the AI boom. Other tech companies have poured billions of dollars into ordering chips from NVIDIA, considered far superior to its competitors in producing high-end semiconductors. As a result, NVIDIA’s stock price has soared over 400% in the past three years.
However, Raymond James analyzed that investors maintain a somewhat skeptical view on whether AI can directly contribute to NVIDIA’s earnings, at least in the short term. They cautioned that NVIDIA’s new orders could slow down if this sentiment spreads to executives at big tech firms like Alphabet.
Meanwhile, NVIDIA is set to announce its second-quarter earnings on August 28. The second-quarter revenue is projected at $28 billion, surpassing the Wall Street forecast of $26.6 billion compiled by market information firm LSEG.
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