Shares of NVIDIA fell more than 6% Thursday following the company's earnings report late Wednesday night.
For the most recent quarter, NVIDIA beat analyst expectations for earnings per share by four cents, as they earned $0.89 per share for the quarter.
The company turned in 39.3. Revenue exceeding analysts’ expectations by more than $1 billion dollars. But there is a problem with NVIDIA’s revenue.
The company’s reported revenue of $39.331 billion only reflected the 77.9% growth compared to the Same quarter last year. This extends the number of quarters that NVIDIA has seen smaller quarterly growth to four in a row.
While NVIDIA’s earnings results are impressive, they just don’t match the sky-high expectations that Wall Street and individual investors have set for the stock.
NVIDIA’s management did provide updated guidance for the next quarter. The company guided revenue higher to $42,068 billion in revenue. That number is at the top end of analysts’ target for the quarter.
In summary, Palantir has a revenue growth problem.
That problem translated into heavy losses for the day and a technical breakdown that investors need to be concerned about.
Today’s decline saw NVIDIA stock break below its 20-, 50- and 200-day moving averages on the same day.
This type of technical damage will often precede an elongated period of selling as investors and technical traders adjust to a shift in the stock’s long-term trend.
Just to weeks ago, Palantir’s 50-day moving average shifted into a bearish pattern, setting the stock up for a 4–6-week period of technical pressure.
Today’s move below the 200-day trendline will be seen as further deterioration of the stock’s price stability.
Investors should expect that NVIDIA stock will now move towards price targets of $110 followed by $100, the latter of those prices should provide strong round-numbered support for the stock to build a tradable bottom.
While NVIDIA’s long-term trend remains bullish with a target price of $175, the stock’s short- to intermediate-term outlook is rated as “correction” with a price target of $100.
