Key Insights
- Nvidia stock price crashed to a crucial support level last week.
- The company launched new Windows chips on Monday.
- It has strong revenue growth and is highly undervalued.
Nvidia stock price has crashed into a correction in the past few weeks, even as the S&P 500 and Nasdaq 100 indices surged to a record high. It has pulled back to the strong, pivot, reverse level of the Murrey Math Lines. Its strong technicals and fundamentals suggest that the shares will be on the cusp of a strong bullish breakout.
Nvidia Stock Price Technicals Suggest That a Rebound is Possible
The daily chart shows that NVDA stock has plunged over the past few days. This retreat started at $236.83 and is now at $211.15. This price is notable because it coincides with the previous all-time high and the strong pivot, reverse of the Murrey Math Lines.
The stock has remained above the 100-day Exponential Moving Average, a sign that bulls remain in control. It has retested the upper side of the cup-and-handle pattern. That is a sign that it has formed a break-and-retest pattern, a common continuation sign.
Therefore, there is a likelihood that the Nvidia stock will bounce back in the coming days or weeks. If this happens, the next key level to watch is $236, its highest point on record. Soaring above that level will signal further gains, potentially to the psychological level at $250.
On the other hand, a drop below the Major S/R pivot point at $200 will invalidate the bullish outlook.
Nvidia Launches New AI Chip to Challenge AMD and Intel
A potential bullish catalyst for the Nvidia stock price is that the company just launched a new central processing unit (CPU). Jensen Huang launched this chip in a major event in Taiwan, a place it plans to invest $150 billion.
The new chips will initially go into computers made by Microsoft. They will then be launched in other computers made by companies like AMD and Intel. In his statement, Huang noted that the new chips will help to reinvent the PC in the new AI era. This is important as Microsoft’s attempts to enter the AI PC industry have largely failed.
Nvidia believes that the new business will be worth over $200 billion, especially because of the ongoing growth of AI agents. Unlike large models built by companies like Anthropic and OpenAI, which require powerful GPUs, AI agents mostly run on CPUs.
Still, Nvidia faces an uphill battle, with AMD and Intel having a strong market share in the sector.
Nvidia Growth is Accelerating
Despite being in the industry for decades, Nvidia has become one of the fastest-growing companies in the United States. The most recent financial results showed that its revenue continued to grow in the first quarter.
Its revenue surged by 85% in the first quarter to $81 billion, with its data center segment continuing to grow. The company believes that the growth will continue in the coming years.
Data compiled by Yahoo Finance shows that the company’s revenue will grow by 81% to $391 billion. Chances are the actual number will be higher than expected, as the estimates did not include the new CPUs and Trump’s decision to allow 10 Chinese companies to buy H200 chips.
Ironically, for a blue-chip company experiencing double-digit growth, its valuation should be substantially higher than the broader S&P 500 Index average. In Nvidia’s case, the forward P/E ratio stands at 23, in line with the index’s average.
The same is true of its price-to-earnings-to-growth (PEG) ratio, which stands at 0.54, below the sector median of 1.40. It is also lower than the five-year average of 1.50. Also, it has one of the best rule-of-40 multiples.
Therefore, these fundamentals suggest that the NVDA stock price will continue rising in the coming weeks or months.
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