NVIDIA Stock Analysis as Valuation of its VC Portfolio Jumps

Key Insights

• NVIDIA stock price is hovering at a crucial support level.
• The company’s portfolio companies are seeing their valuations jump.
• The stock has formed several bearish patterns pointing to more downside.

NVIDIA’s stock price could drop sharply soon despite having some major catalysts, including the growing valuations of its top venture-backed companies soaring. NVDA dropped to $176, down by over 20% from the all-time high of $212.

Top NVIDIA Investments are Thriving

NVIDIA has a major catalyst that many Wall Street analysts may be ignoring: some of its investments are firing on all cylinders this year.

The most recent one is Reflection, a company that NVIDIA invested $800 million in a few months ago. It is now raising an additional $2.5 billion at a $25 billion valuation, with JPMorgan being a major investor.

Reflection is similar to other companies like OpenAI, with the main difference being that it uses open-source models, allowing users to modify them.

NVIDIA also invested $10 billion in November last year, a value that will likely surge once the company goes public later this year.

The company recently inked a deal to invest $20 billion in OpenAI, the parent company of ChatGPT. This new investment occurred at a valuation of over $750 billion, a figure that will continue to grow, especially when it goes public either this year or in 2027.

Most recently, NVIDIA invested in CoreWeave and Nebius, two of the biggest neocloud companies in the world. Their stocks have jumped since the company made these investments.

The company benefits from these investments in two ways. First, they use these investments to buy NVIDIA chips, which boosts its revenues, and in theory, the stock price. This is known as a circular investment. Second, NVIDIA will benefit when these companies go public.

NVIDIA has used its windfall to invest in other companies. For example, the company invested $5 billion in Intel last year. Since then, the stock has jumped by nearly 90%. Some of the other companies NVIDIA has invested in recently are Elon Musk’s xAI and Cursor.

NVIDIA’s Growth is Continuing

All these investments are happening at a time when NVIDIA’s business is thriving, while its valuation has pulled back. For example, the company’s CEO, Jensen Yuang, recently confirmed that it will make $1 trillion in GPU sales through 2027.

Third-party data shows that the company’s momentum is expected to accelerate. The annual revenue is expected to jump to $370 billion this year, followed by $480 billion in the coming year.

Analysts also believe the company’s profitability will continue to grow as its manufacturing costs decline. Earnings per share (EPS) will be $8.30, up almost 100% from last year. It will then make over $11.12 per share next year.

Several catalysts will be driven by several catalysts. For example, the company will launch its new Central Processing Unit (CPU) soon, bringing in a new revenue channel.

Additionally, the US and China will likely reach a deal later this year when Donald Trump arrives in the country. Such a deal will be a major one as demand from companies like Alibaba, Tencent, and Baidu remains elevated. Just last week, US authorities announced a major lawsuit against Super Micro Computer’s officials for smuggling these chips to China.

NVIDIA Stock Price Prediction

There are signs of a disconnect between NVIDIA’s technicals and fundamentals. The daily chart shows that the 50-day and 100-day Exponential Moving Averages (EMAs) are about to cross. This crossover is a highly common bearish sign.

The stock has also formed a head-and-shoulders pattern and is now hovering near the neckline. It also fell below the Ichimoku cloud.

Therefore, this chart suggests that the stock will have a strong bearish breakout. If this happens, the next important level to watch will be the 50% Fibonacci Retracement level at $150.

On the other hand, a rebound above the important $183 resistance level, the 23.6% retracement, will cancel the bearish outlook. Such a move will point to more upside to the year-to-date high.

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