NVIDIA Stock Just Hit a Crucial Support: Is it Ready to Pounce?

Key Insights

• NVIDIA stock price retreated to a crucial support level.
• It has completed the break-and-retest pattern.
• Some notable catalysts like its revenue growth points to a rebound.

NVIDIA stock price declined for a fourth consecutive session, falling to its lowest level since May 7. The pullback followed strong quarterly earnings and appeared driven largely by profit-taking after a sharp rally earlier this year.

Despite the decline, technical indicators suggested the stock approached an important support zone that traders continue monitoring closely.

NVIDIA Stock Price Retests Major Breakout Level

The daily chart shows that the NVDA stock price has crashed in the past few days. Ironically, this retreat started after the company published strong financial results last week.

A closer look at this chart shows that this retreat is part of the break-and-retest pattern, a common continuation sign in technical analysis. In this case, it has retested the key support at $212.60, the upper side of the cup-and-handle pattern. This price also coincided with the strong pivot, reversal level of the Murrey Math Lines tool.

C&H is a common continuation sign that is made up of a horizontal resistance, a rounded bottom, and a pullback. In this case, the cup has a depth of 23%. Measuring the same distance from the upper side of the cup gives it a target of $260, much higher than the current $212.

The bullish outlook will become invalid if the price drops below the Major S/R pivot point at $200. A move below that level will invalidate the bullish forecast and point to more downside.

NVIDIA is Firing on All Cylinders

The ongoing NVDA stock price crash is happening as investors book profits after soaring by 45% from its lowest point in March this year. It is common for stocks and other assets to retreat after experiencing a major rally as investors book profits.

Still, in reality, there are signs that NVIDA is firing on all cylinders, with key catalysts set to push it higher in the long term. For example, the most recent earnings showed that its business continued growing in the first quarter.

Its revenue jumped by 85% in Q1 to over $80 billion, with the management guiding to $91 billion in annual revenue in the second quarter. After that, the company is expected to cross the $100 billion revenue mark in Q3.

NVIDIA is benefiting from the rising demand for its GPUs, which have become the most advanced in the AI industry. On top of this, the company built Compute Unified Device Architecture (CUDA), a software package that activates NVIDIA GPUs for general-purpose processing. CUDA is the gold standard in its industry, beating similar solutions such as AMD ROCm and OpenAI’s Triton.

Analysts are optimistic that NVIDIA has more room to grow in the coming years as the AI boom continues. After this stage, there is a likelihood that it will have a role to play in the quantum computing era.

One area for growth is in China, where companies like Alibaba, Tencent, and JD have been allowed to buy its less advanced H200 chips. Jensen Huang believes China can generate over $50 billion in annual revenue for the company.

The company also has more room to grow in the CPU industry, which has started to boom. The CPU demand is being boosted by the ongoing growth of AI agents.

Most importantly, despite all these metrics, NVIDIA is still trading at a bargain. While its trailing twelve-month (TTM) price-to-earnings (PE) ratio of 33 is a bit high, its forward multiple is 22.

This multiple is slightly lower than the S&P 500 Index average of 22. Also, the company has one of the best rule-of-40 multiples. It has a forward revenue growth of 70% and a net profit margin of 55%. This gives it a multiple of 125%, and is one reason why most analysts are upbeat about the company.

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