What Technical and Fundamental Analysis Says about NvidiaNvidia NASDAQ:NVDA soared nearly 20% Wednesday before pulling back some later in the week, leaving the stock down roughly 25% over the past six months. Where does technical and fundamental analysis say the chip giant’s stock could go from here?
Let’s take a look:
Nvidia’s Fundamental Analysis
Nvidia got a huge boost Wednesday from the Trump administration's decision to pause the tariffs it planned to impose on most nations’ U.S.-bound exports.
Instead, the White House decided to delay most tariffs on countries other than China for the next 90 days while it conducts trade negotiations with some 70 nations.
As an added benefit for Nvidia, the president's team separately paused an expected export ban that would have prohibited Nvidia from shipping its high-end H20 GPUs to China.
Now, I don't know how many of these chips Nvidia would really sell to Beijing, as both nations recently placed almost prohibitive tariffs on each other's exports.
But the market had probably already largely priced in the H20 export ban, which is now not moving ahead. The sale of these chips to Chinese customers in all likelihood remains legal.
Nvidia's publicly known Chinese customers for those chips include such well-known names as Alibaba NYSE:BABA , Tencent OTC:TCEHY and privately held ByteDance. All of those three have placed large H20 orders this year.
As for earnings, Nvidia won’t report fiscal Q1 results until probably May’s last week.
However, the firm posted fiscal Q4 numbers in February that showed 82% year-over-year earnings growth on 72% y/y revenue gains.
While those are big percentage increases, they nonetheless marked a deceleration from prior quarters’ y/y gains.
Similarly, management’s latest forward sales guidance remains strong, but also reflects a continuance of this year-over-year percentage deceleration.
The company’s midpoint projection calls for $43 billion in fiscal Q1 revenue, which would amount to about a 65% year-on-year revenue gain.
NVDA also guided fiscal Q1 GAAP gross margin to 70.6% and adjusted gross margin at 71%, plus or minus 50 basis points. That was just a touch below analysts’ consensus view at the time.
All in, the Street is looking for Nvidia to report $0.88 in GAAP earnings per share for its current quarter, as well as $0.93 in adjusted EPS and $43.3 billion in revenues.
That would represent an 52.5% gain from the year-ago quarter’s $0.61 in adjusted EPS, while also reflecting 64% in year-over-year sales growth.
This would beat of the firm's own guidance, as 25 of the 32 sell-side analysts that I can find that cover Nvidia have increased their estimates for the quarter since it began. (Seven have cut their forecasts.)
Technically Speaking
Now let’s check out NVDA’s chart going back to last September and running through midday on Thursday (April 10):
Readers will see that NVDA recently came out of a so-called “double top” pattern of bearish reversal that spanned from last October into early January, as marked with the “Top 1” and “Top 2” red boxes above.
However, the stock trended lower from that point on, as I capture above within the confines of an Andrews' Pitchfork model.
Though the chipmaker’s stock has at times pierced both the pitchfork’s upper and lower trendlines, it hasn’t broken out in either direction so far.
Even after NVDA’s 18.7% one-day rally on Wednesday, the stock immediately gave back its 21-day Exponential Moving Average (or “EMA,” marked with a green line above) on the very next day.
The stock also remains well below both its 50-day Simple Moving Average (or “SMA,” denoted by a blue line) and its 200-day SMA (marked with a red line).
This means that in all likelihood, Nvidia might very well remain an instrument of short-term trading rather than long-term investing. After all, portfolio managers generally don’t like to carry a lot of exposure below those two moving averages.
As for Nvidia’s other technical indicators, the stock’s Relative Strength Index (or “RSI,” marked with a gray line at the chart’s top) remains unimpressive.
Similarly, the company’s daily Moving Average Convergence Divergence indicator (or “MACD,” marked with the black and gold lines and blue bars at the chart’s bottom) looks bearish.
All of its three components -- the histogram of the 9-day EMA (the blue bars), the 12-day EMA (the black line) and the 26-day EMA (the gold line) -- are below zero. That’s usually a bearish technical indicator.
From where I stand, Nvidia’s upside pivot is the stock’s 50-day Simple Moving Average (or “SMA,” marked with a blue line and currently at around $119.30 vs. NVDA’s $107.57 close Thursday).
Meanwhile, if the stock can hold its 21-day EMA (the green line above, currently at about $109.90) that could get the swing-trading crowd on board.
However, a failure to hold there would likely make the odds of attracting capital flows from portfolio managers pretty weak.
(Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no position in NVDA at the time of writing this column.)
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