Nvidia (NASDAQ: NVDA) stock might be facing a possible extended correction as the equity’s technical indicators suggest more trouble could be on the way.
Already, Nvidia is battling increased volatility that has confined the stock below the $120 resistance despite the American semiconductor giant boasting bullish fundamentals from its artificial intelligence (AI) leadership.
By press time, NVDA’s share price was trading at $117.70, ending the last session down 0.7%. Indeed, the stock has had a challenging start to 2025, dropping almost 15% year-to-date.
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Nvidia stock forms death cross
From a technical perspective, Nvidia stock has formed a bearish death cross for the first time since April 2022. Notably, the last time this pattern formed, it led to a 47% crash in the stock over six months.
The pattern forms when the 50-day moving average ($126.92) falls below the 200-day MA ($127.76), often seen as a bearish indicator.
Given Nvidia’s current struggles, there are concerns that the stock might follow a similar trajectory as the last time this dreaded pattern occurred.
Indeed, the possibility of Nvidia witnessing a crash is heightened by the fact that the general stock market remains on edge amid prevailing economic uncertainty brought forth by unease from President Donald Trump’s trade tariffs.
Considering the possible impact of the death cross formation, Nvidia needs to hold several support zones to avoid sustained losses. In this case, the $100 level remains crucial.
Notably, in an X post on March 21, pseudonymous stock trading analyst Diamond Options noted that with the death cross formation, Nvidia might be testing $100 soon.
The analyst observed that a descending trendline from the $153 high in January continues to act as Nvidia’s long-term resistance. With weak momentum indicators, further declines could be on the horizon. The Relative Strength Index (RSI) at 45.75 suggests the stock is not yet oversold.
If the semiconductor giant fails to reclaim the $126.92 resistance level, it could risk further declines toward the $110 support zone or lower. However, a breakout above the 50-day MA could challenge this bearish outlook.
Nvidia stock’s bullish fundamentals
Despite this technical warning, Nvidia’s fundamentals remain intact, especially with the company’s leadership role in the AI chips sector.
The firm’s potential was reinforced at the GPU Technology Conference (GTC), where CEO Jensen Huang declared that AI is at an “inflection point” and projected $1 trillion in data center revenue by 2028. This could be a catalyst that sees Nvidia’s revenue soar to new highs.
At the same time, the company’s new Blackwell Ultra chips, set to launch later this year, promise greater efficiency, while innovations in AI robotics and autonomous driving are poised to usher in new opportunities for the American technology giant.
Additionally, Nvidia shows further potential for growth, given that the stock is currently undervalued, trading at a forward P/E below 26 and a price/earnings-to-growth (PEG) ratio under 0.5.
Consequently, for long-term investors, the current bearish sentiment offers an ideal opportunity to invest in the stock.
Finally, Wall Street analysts at TipRanks have a consensus rating of ‘Strong Buy’ on Nvidia stock, setting an average price target of $176 over the next 12 months.
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