Nvidia Stock Forecast as the AI-Fueled Tech Sell-Off Intensifies

Nvidia stock continued its strong sell-off on Thursday, reaching its lowest level since April 9 this year. It has moved deeper into a deep bear market after falling by 25% from its highest point this year. So, will this sell-off gain momentum or is it now safe to buy the dip?

Nvidia Stock Crashes as AI Rout Gains Steam

The artificial intelligence industry has contributed to the stock market gains in the past few years. It helped drive Nvidia shares to a record high. 

Recently, however, the tide has turned in the past few weeks, with most AI companies being in the red. Nvidia, the biggest name of them all, has become the top laggard, falling by over 25% from its highest point this year. 

The decline coincided with the midterm elections, in which Democrats won by a large margin. They are now on track to win 56 seats in the Senate and have crossed the 250-seat milestone in the House of Representatives. 

Their victory has also coincided with the ongoing repudiation of data centers by the American public. Recent polls show that many Americans don’t like data centers, mostly because of the impact on power, which drives up electricity bills. Indeed, many Americans voted for data center moratoriums. In Ohio, 14 municipalities passed bans or restrictions on data center development, including one that will affect a $2 billion development by Amazon.

Americans, especially the young ones, are also concerned that AI will take their jobs. Indeed, some large companies have announced large job cuts as they focus on AI optimizations.

At the same time, Democrats campaigned on making AI safety a priority when they retake Congress. This means passing stricter regulations that companies like OpenAI and Anthropic need to follow, especially as security incidents become more serious.

Nvidia will be affected in all these because it is the biggest player in the industry, where it sells the chips used in data centers. It has also invested in tens of companies across the sector, including chipmakers and neoclouds.

Potential Catalysts for NVDA Stock Remain

There are several potential catalysts for Nvidia shares. One of them is that Nvidia recently announced a big share buyback as it takes advantage of the lower valuation. As such, the company will likely take advantage of the lower stock price to accelerate the stock purchase. 

The other catalyst for the stock is that the company’s business continues to grow this year and management expects the trend to continue next year. Nvidia expects the company’s revenue growth to be 70%, much higher than what analysts were expecting.

The upcoming earnings report is expected to show that its revenue grew in the third quarter. Its revenue is expected to come in at $108.9 billion, up by 91% from a year earlier. In most cases, the company tends to do better than expected, meaning that its revenue will be higher. 

NVDA Share Price Technical Analysis

The daily chart shows that the stock has been in a strong sell-off in the past few weeks. It dropped from a high of $243 in October to the current $181. 

The stock has plunged below the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bears remain in control. 

Nvidia has dropped below the important support level of $189.90, its lowest level in June and July this year. Also, the stock has slumped below the Ichimoku cloud indicator.

Therefore, the stock may continue falling in the near term. If it drops, it may drop to $150. In the future, however, the stock will rebound as investors start buying the dip.

This article is for informational purposes only and does not constitute financial advice. Stock investments carry risks, and technical price projections do not guarantee future returns.