Nvidia has been trading flat since June. After the break of the cup formation with a huge gap, NVDA lost its upward momentum despite positive price forecasts. The China curbs are also slowing the upward pressure because they could mean a $5 billion revenue loss for Nvidia, according to the Wall Street Journal. Despite the negative news, the AI boom could still be in its early stages, and NVDA remains the number one player with a lot to gain in the coming years. Bloomberg’s estimated P/E ratio fell below 40 for the first time since last November while the stock was dipping around $150. Analysts’ expectations for the next twelve months show nearly 50% potential. Additionally, blended forward price-to-earnings ratio and blended forward EV/EBITDA ratio are well below the last two and five-year averages. The MACD and MACD signal difference are testing their lowest levels of the last three years.
The current flat pattern has formed a head and shoulders formation above $400. However, every time the neckline is tested, the price reverses with above-average volumes. The latest reversal could potentially mark the end of the bearish formation, as it failed to break the neckline. For upward movements, $465 could be a level to watch. If it breaks, along with the top point of the formation, the upward momentum might continue where it left off. The price target for the cup formation is $575, and analysts’ estimated price target for the next 12 months is $648. So, around $600 could be a relatively safe bet if the flat zone ends with an upside breakout.
Regarding downward movements, the key will be the possible break of the $400 support. If it occurs, downswings may extend as far as $345, which was the key level in the previous cup formation. Over the medium to long term, as long as the fundamentals do not change significantly, potential downward movements can present buying opportunities.
