Nvidia Shares Drop Nearly 7% After Earnings Report, Key Levels to Watch
Nvidia (NVDA) shares took a tumble in extended trading on Wednesday after the artificial intelligence (AI) darling’s quarterly earnings topped expectations but left investors disappointed as the latest numbers pointed to slowing growth. The chipmaker has consistently impressed Wall Street with its blowout earnings reports driven by the high demand for AI. However, the latest earnings release fell short of expectations, causing shares to drop nearly 7%.
Although Nvidia shares have seen a significant increase of around 150% since the beginning of the year, they have also experienced notable price swings in recent months. Between July and August, the stock fell as much as 33% before making a remarkable recovery just before the earnings report. Despite this recovery, the shares closed only 11% below their record high.
Following the earnings announcement, Nvidia shares dropped 6.9% to $116.95 in after-hours trading on Wednesday. This decline has raised concerns among investors, who are now closely monitoring the stock’s performance and key levels to watch.
One important factor to consider is the projected breakdown from the recent rectangle formation. After a strong recovery from this month’s low, Nvidia shares have consolidated within a narrow rectangle formation over the past seven trading sessions. Although the volume remains relatively low, share turnover has increased this week, indicating portfolio rebalancing before the quarterly results.
The projected earnings-driven drop on Thursday could see the shares breaking down below the recent rectangle and the 50-day moving average. This move has the potential to trigger further weakness in the stock. As a result, investors should pay attention to four key price levels that may come into play if the shares continue to slide after earnings.
The first level to watch is around $116, where a trendline connecting the May peak and the high of a minor countertrend relief rally in early August provides initial support. If the shares fall below this level, they may drop to the $107 area, where buyers may seek entry points near a series of closely aligned trading levels between May and August.
Further selling could lead to a retest of the key $97 level, where Nvidia shares would likely encounter considerable support near twin March peaks. The first of these peaks marked a prior record high in the stock. Lastly, investors should keep an eye on the $91 area, which is a lower price target predicted when extracting the down trending bars pattern from July to August and positioning it from the high of the recent rectangle formation. A move to this level would confirm a descending channel in the stock and could result in a possible retest of this month’s low.
In conclusion, Nvidia shares experienced a significant drop in after-hours trading following the release of their quarterly earnings report. The disappointing numbers and indications of slowing growth have raised concerns among investors. As the stock continues to undergo post-earnings price movement, it is crucial to monitor key chart levels at $116, $107, $97, and $91. These levels will provide important insights into the stock’s future performance and potential support or resistance areas.
