NVIDIA shares Friday afternoon dropping almost 4% to their critical 50 day moving average. Shares have seen considerable resistance at the $140.00 price level, which finally broke the stock lower today.
The drop coincides with the ending of NVIDIA’s AI conference that was held this week with closing comments on Friday. During those closing remarks, NVIDIA’s CEO Jensen Huang offered his opinion that investor’s reaction to DeepSeek was wrong.
The stock’s decline comes as President Trump was set to sign another executive order today that will allow for tariff retaliation against digital services taxes that various countries impose on large US technology companies.
Investor’s fears towards tariffs appears to be more apparent through this week as tariffs against Mexico and Canada may be set to go into effect in March.
Walmart’s earnings report earlier in the week refocused investor’s attention to the looming tariffs as the company lowered expectations for profits due to the possible effect of the Administration’s tariff programs.
Nvidia's decline drops the stock back to its 50-day moving average just below $135.
That 50-day moving average shifted into a bearish trend in the beginning of February following the stocks dropped to $120.
The technical breach comes within a week of the company's next earnings results set to be released Wednesday, February 26.
The upcoming earnings call will be critical in investors’ eyes as NVIDIA has been slowing the rate of its earnings per share, revenue beats as well as the company’s forward-looking guidance.
As one of the most widely purchased and recommended stocks by Wall Street in, NVIDIA cannot afford to miss its earnings mark this quarter. Investors are already in a revaluation mode when it comes to AI and AI spending, any disappointment from NVIDIA will send the shares beyond a “Healthy Correction”.
Options traders appear concerned about Nvidia's short term trading as well.
Contracts for the March $130 puts heated up on Friday, trading more than 17,000 contracts. This suggests that some traders are positioning themselves for a move well below $130.00 next week following the company's earnings report.
Technical Support does still lie in the stocks 200 day moving average, currently set at the $125 price level.
Within Nvidia's 50 day moving average, already in a bearish trend, a break below that 200-day moving average would target a price of $100 per share over the next 4-6 weeks, a 25% decline from Friday’s close.
Investors would likely choose that $100 price target as a valuable Buy the Dip Target Price for the stock.
Shares of NVIDIA do maintain a long-term bullish outlook with a high likelihood of a short-term bearish trend.
