Nvidia shares fell in premarket trading, despite earnings surpassing estimates
FUNDAMENTAL OVERVIEW:
- Nvidia shares declined in U.S. premarket trading on Thursday, even though its fiscal second-quarter results exceeded estimates.
- Analysts noted that Nvidia would have needed to significantly surpass expectations to see a stock price increase.
- This pullback follows a dramatic rally, with Nvidia’s shares up over 150% this year.
Nvidia shares fell in U.S. premarket trading on Thursday, as the slight decline in the company’s fiscal second-quarter gross margin overshadowed its revenue beat amid increasingly high expectations.
On Wednesday, Nvidia reported July quarter revenue exceeding $30 billion, marking a 122% year-on-year increase. This is the fourth consecutive quarter of triple-digit revenue growth, though annual comparisons are becoming more challenging due to rapid expansion. For its fiscal third quarter, Nvidia provided guidance of $32.5 billion in revenue, which would represent an 80% increase year-on-year but a slowdown from the June quarter.
Thursday’s stock pullback follows a remarkable rally, with Nvidia’s shares surging over 150% this year alone. Since the beginning of 2023, the stock has soared more than 750%, benefiting significantly from the artificial intelligence boom. Major tech companies have increased investments and purchased Nvidia’s graphics processing units to train large AI models.
The recent decline in Nvidia’s share price also impacted semiconductor stocks globally, with major companies such as memory maker Samsung and chip manufacturer Taiwan Semiconductor Manufacturing Company seeing losses on Thursday.
NVIDIA TECHNICAL ANALYSIS DAILY CHART:
Technical Overview:
Nvidia is trading within a down channel.
Nvidia is moving below 10&20 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Neutral Zone, while the Stochastic oscillator suggests Negative trend.
Immediate Resistance level: 123.89
Immediate support level: 119.86
HOW TO TRADE NVIDIA
Nvidia, after a significant price surge, entered a period of consolidation. However, this consolidation phase proved unsustainable, leading to a sharp price decline that breached major support levels. Recently, Nvidia attempted to recover, testing a key resistance zone. If the price fails to break through this resistance and continues to trade below it, further downward pressure is likely.