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Nvidia stock price has remained in a tight range this month, with any attempts to bounce back finding substantial resistance. NVDA retreated to $185 at press time, down from the all-time high of $195. This article explores whether it is a good buy ahead of the earnings season.
Nvidia Stock Price Wavers as Risks Rise
The Nvidia share price has moved sideways in the past few months as investors watched the developments on the US and China relations and as fears that the AI bubble is about to burst remains.
After hitting its all-time this month, the stock suffered a harsh reversal as investors reacted to the new developments from the two most powerful countries in the world.
One major thing is that Nvidia has likely lost the Chinese market as the country has asked its top companies to avoid semiconductors made by Nvidia. Beijing hopes that these actions will help to stimulate domestic production and make the country self-reliant. That’s because the US has used chips as a threat during negotiations.
Nvidia stock price has also wavered as investors question the circular nature of AI investments. A good example of this is Nvidia’s commitment to invest approximately $100 billion in OpenAI, which will then turn around and purchase its chips, thereby boosting its revenue.
Most importantly, analysts have been warning about the AI bubble, with a new Bloomberg survey finding that 54% of Wall Street analysts believe that the industry is in a bubble that may burst in the near term. In a statement to CNBC, Pat Gelsinger, who ran Intel, said that the industry was in a bubble.
Nvidia also faces a concentration risk, as most of its revenue is derived from the AI data center industry. The other businesses, such as automobile, robotics, and gaming, are still minor parts of its operations. As a result, these businesses will not offset its operations if the business slows.
Earnings Season Could Affect NVDA Stock
Looking ahead, the next major catalyst for Nvidia’s stock price will be the earnings season, which began today, October 14.
While its earnings will be reported in November, some companies in the industry will publish their results soon and provide insights into the industry. For example, Taiwan Semiconductor, commonly known as TSMC, will release irs numbers on Thursday.
TSMC’s results are typically good indicators of Nvidia’s business, as it manufactures most of its chips. As a result, strong financial results will be beneficial for NVDA stock and other chip companies.
ASML will release its results on Wednesday. While ASML does not manufacture chips, it produces products used in the manufacturing process of chips. It has a near monopoly in the lithography industry. As such, strong results will provide evidence that the sector is performing well.
The other top companies whose earnings will impact Nvidia include hyperscalers such as Microsoft, Meta Platforms, Amazon, and Google. A commitment to keep spending will be highly bullish on Nvidia.
Analysts expect the upcoming results to show that Nvidia’s revenue rose by 55% in the third quarter to $54 billion, while its annual revenue is expected to grow by 58% to $205 billion.
Nvidia Stock Price Technical Analysis
The daily timeframe chart shows that the Nvidia stock price peaked at $194.68 last week and then pulled back. This retreat happened amid tensions between the United States and China.
The stock has moved to the key support at $184, which was its previous all-time high. It is also hovering slightly above the 50-day and 25-day moving averages.
The two lines of the PPO indicator are about to form a bearish divergence pattern. Also, the Average Directional Index (ADX) has plunged, a sign that the volatility has dived.
Therefore, the most likely Nvidia stock price forecast is bearish, with the next point to watch being the 50-day EMA at $177. A move above the resistance point at $195 will point to more upside.
