Nvidia (NVDA) broke a key level of support on Tuesday after supplier Taiwan Semi reported its November sales. Shares fell below the 50-day moving average and remained below that level Wednesday morning.
The 50-day moving average is a key level of support, and Nvidia had not broken it even once since Sept. 12 until Tuesday — ending a nearly three monthlong feat.
On Tuesday, Taiwan Semi said that sales grew 34% annually in November but declined 12.2% from October. From January to November, sales grew 31.8% compared with the same period in 2023. That likely pressured Nvidia, which fell 2.7%.
If you look back at its chart, Nvidia has not made much progress after it broke out at the buy point of 140.76 in October. Ideally, stocks do not move sideways but rather rise after breaking out of bases. Does that mean Nvidia is a buy or sell now?
↑
X
How Nvidia Is Injecting AI Into The Health Care Industry
Nvidia Stock On Watch
On Monday, shares fell 2.6% amid news that China’s State Administration for Market Regulation is investigating whether Nvidia has violated its antimonopoly laws.
But investors are on a wait-and-watch mode for Nvidia trading for three reasons:
First, volume for Nvidia has been lighter and that shows that big institutions like mutual funds have not been trading the stock heavily lately. The decline this week has also been in lighter volume, which is positive.
Spot Bases And Buy Points With Pattern Recognition
But funds have not been rushing in to buy the stock, either. Although the stock’s price performance has beaten 94% of other stocks in Investor’s Business Daily’s database, the Accumulation/Distribution Rating, which measures price and volume action over the last 13 weeks, is just D+.
Shares can surge quickly once big money starts flowing in.
However, the relative strength line, which compares the stock with the S&P 500 index, fell sharply after the stock hit its all-time high of 152.89 last week. The relative strength line compares the stock with the S&P 500. The line, plotted in blue in IBD Charts and IBD MarketSurge, shows that Nvidia has not been matching the index’s gains recently.
It is best to wait for that line to pick up.
On Friday last week, reports said the AI chip behemoth was in talks with Taiwan Semiconductor (TSMC) to start production of its Blackwell chip in Arizona. So far, TSMC has made Nvidia’s most advanced chips in Taiwan. The plan could be a way to get around tariff risks from the Trump administration.
Earlier plans were to use the Arizona factory for less-advanced chips.
Nvidia Rises After Salesforce Earnings
Shares rose more than 3% on Wednesday last week after software leader and Dow Jones component Salesforce (CRM) reported strong results late Tuesday.
Salesforce is in the limelight, with analysts watching how its investment in autonomous AI agents can pay back investors. Salesforce is developing a next generation of autonomous, goal-driven AI “agents.” Customers have been reluctant to pay for the earlier chatbot interfaces, called copilots.
After the company’s report, analysts noted that its artificial intelligence products were gaining traction.
However, earlier, shares came under pressure after President-elect Donald Trump said he plans big tariffs on goods from China, Mexico and Canada.
But Bernstein Research analyst Stacy Rasgon noted that “raw semiconductor” imports from these countries were tiny and would not hurt Nvidia. The analyst did say the tariff raises some concerns that there may be more broad-based action that could hurt the semiconductor industry and even leaders like Nvidia.
Mizuho analyst Jordan Klein noted that the “restrictions seem in line or less severe than anticipated.” Piper Sandler analysts also stated that there were fewer entities on the restriction list than expected.
In November, analysts at Piper Sandler projected a 20% upside for the stock and raised their price target to 175 from 140. Nvidia is positioned to gain most from the increase in the total AI accelerator market, which Piper Sandler sees at $70 billion in 2025.
Stock Market Leader
For Nvidia, its earnings growth is its strong point.
The AI chip behemoth continues to be a stock market leader and has an ideal Earnings Per Share Rating of 99, while the stock also shows all-around strength with a Composite Rating of 96.
Nvidia stock is on the IBD Leaderboard, and IBD 50. It is also a top AI stock to watch.
Are These Magnificent Seven Stocks A Buy Now?
Alphabet | Amazon | Apple | Meta | Microsoft | Nvidia | Tesla
According to FactSet data, Nvidia ranks first among S&P 500 companies for revenue and earnings growth estimates through 2026.
Analysts expect a compound annual growth rate of 5.7% in sales for the S&P 500 with 13.8% in earnings per share over two years. But they see Nvidia’s two-year compound growth reaching 35.5% in sales and 35.1% in earnings per share.
Third-Quarter Results Beat Views
Third-quarter sales came in at $35.08 billion with earnings of 81 cents per share. Analysts polled by FactSet had estimates of 75 cents per share on sales of $33.17 billion. Sales also beat the AI chip leader’s outlook of $32.5 billion for the quarter.
Sales nearly doubled from the prior year, when Nvidia reported $18.1 billion in revenue.
Earlier, chip lithography gear maker ASML (ASML) maintained its 2030 sales target of $46.3 billion at the lower end. The announcement followed a warning on Oct. 15, when ASML anticipated slower demand in 2025. That sent Nvidia stock nearly 5% lower on the day.
ASML Chief Executive Christophe Fouquet said the company expected that it would be able “to scale (extreme ultraviolet lithography) technology into the next decade” and contribute to the artificial intelligence opportunity.
Analysts at Jefferies Group believed that the slowdown in chip demand appeared to be temporary. ASML’s lithography machines are used by foundries that supply chips to Nvidia.
Analysts Views Ahead Of Third Quarter Results
Ahead of Nvidia’s results, Morgan Stanley analyst Joe Moore cited concerns over a chip shortage that could dent its earnings and outlook.
The analyst maintained an overweight rating and 160 price target but saw the September-ended period as a “transitional quarter.”
Revenue from its Blackwell chip could be $5 billion to $6 billion in the January quarter, the analyst said.
Melius Research analysts also raised their price target to 185 from 165 and maintained their buy rating.
Nvidia replaced Intel (INTC) in the Dow Jones Industrial Average in November. It is also the fourth Magnificent Seven stock to join the Dow Jones industrials. The others are Apple (AAPL), Amazon.com (AMZN) and Microsoft (MSFT).
Big Tech’s Strong AI Spending
Recent news shows demand for Nvidia’s AI chips remains high. The chief investment officer at UBS Global Wealth Management, Mark Haefele, noted that “Big Tech’s combined capex (capital expenditure) spending of $218 billion this year and another $254 billion in 2025 bodes well for the AI investment thesis.”
Meanwhile strong AI data center demand helped Vertiv (VRT), which provides products and services to build AI data centers, beat earnings estimates for its September quarter.
In October, Nvidia CEO Jensen Huang said that a design flaw in its next-gen Blackwell chip had been fixed.
Earlier, yields were low but AI-chip maker Taiwan Semiconductor (TSM) helped “recover from that yield difficulty and resume the manufacturing of Blackwell at an incredible pace.”
Nvidia stock cleared a trendline entry near 139.60 on Oct. 17 after Taiwan Semiconductor profits surged 54.2% year over year. Taiwan Semi is a big supplier of AI chips to Nvidia and Apple.
Nvidia Is A Must-Watch Stock
Meanwhile, bullish trends for artificial intelligence make Nvidia a must watch. In September, consulting firm Bain said the total addressable market for AI hardware and software will grow 40% to 55% for at least the next three years.
Demand for Nvidia’s next generation graphics processing unit, the GB200, is expected to reach 3 million in 2026 vs. 1.5 million for its H100 units in 2023.
Elsewhere, analysts at Bernstein said that after its phenomenal growth, sustainability is the main question Nvidia faces, but the “time to worry is clearly not now.”
On Sept. 3, Nvidia fell sharply below the 50-day moving average and saw the largest one-day market cap ever loss in dollar terms for any U.S. company, according to Dow Jones Markets Data.
Earnings From AI Giants Move Nvidia Stock
Results from other AI leading companies have influenced the stock. Memory-chip maker Micron (MU) cited robust AI demand, which gave Nvidia stock a lift while Oracle (ORCL) Chairman and Chief Technology Officer Larry Ellison said his company is building a data center with “acres of Nvidia GPU clusters for training large language scale AI models.”
AI Stocks: Tech Giants, Cloud Titans Face ‘Show Me’ Moment
Broadcom (AVGO) results weighed on Nvidia. Broadcom’s sales and earnings beat estimates but its sales outlook disappointed.
Nvidia stock fell 6.4% after earnings on Aug. 29 even though it beat analyst estimates.
AI Products Drive Growth
Nvidia’s graphics processing units help accelerate computing in data centers and AI applications.
The company was a pioneer in graphics processors used in such industries as health care, automobiles and robotics.
In March 2023, generative AI took a leap forward with OpenAI’s ChatGPT. According to Huang, Nvidia’s AI-capable chips paved the way for the “iPhone moment of AI.”
That helped Nvidia turn the tide on its results. It had reported three quarters of declining year-over-year sales and four quarters of tapering earnings in late 2022 and early 2023.
But then the company achieved record top- and bottom-line growth in the six most recent quarters.
Is Nvidia Stock A Buy?
Looking at chart signals and technical measures can help investors assess whether Nvidia stock is a buy now.
Nvidia is back below its buy point of 140.76 and the 50-day moving average. Shares Wednesday morning were trying to recover in lighter volume. A continued rebound in high volume would be helpful.
The relative strength line shows that the stock has not outperformed the S&P 500. It would be wise to wait to see if it improves before buying the stock.
The stock has to regain its buy point before it becomes a buy again. For more risk-on investors, an early entry when the stock retakes the 50-day moving average in higher volume is an option. Until that happens, Nvidia is not a buy.
YOU MAY ALSO LIKE:
IBD Live: Learn And Analyze Growth Stocks With The Pros
MarketSurge: Research, Charts, Data And Coaching All In One Place
The Four Pillars Of The IBD Methodology
Risk Management In The Stock Market: How Much Money To Invest
