Nvidia’s share Plunge: Understanding the Reasons and Outlook

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Nvidia’s share price experienced a significant sell-off on Friday, plummeting by 10 percent during the last session of the week. The Nasdaq-listed stock opened lower and hit an intraday low, marking a loss of 10.70 percent. Despite this sharp decline, investor interest in Nvidia shares remained subdued, raising concerns among market participants.

Reasons Behind the Plunge

The primary catalyst for Nvidia’s share price crash was attributed to Super Micro Computer (SMCI), the company’s hardware business partner, announcing its next earnings date without sharing preliminary numbers for Q1CY24. Additionally, weak quarterly results from Netflix also impacted sentiment towards Nasdaq-listed tech stocks, further contributing to Nvidia’s decline.

Technical Outlook and Support Levels

According to stock market experts, Nvidia’s immediate support level stands at $740 per share, with stronger support at $670 to $680. If selling pressure persists until the announcement of SMCI’s Q1 results, the stock may breach its current support and dip below $700 levels.

Investor Strategies

Ganesh Dongre, Senior Manager of Technical Research at Anand Rathi, suggests that investors view the dip as a buying opportunity, with $670 to $680 being a crucial support zone. Initiating coverage around $700 per share and adopting a ‘buy-on-dips’ strategy on every 4-5 percent fall is recommended for medium to long-term investors.

Historical Performance

Nvidia’s recent stock plunge has erased over $400 billion in market capitalization since March 8th, 2024. Despite a 15 percent loss in the past month, the stock has delivered a remarkable 60 percent return year-to-date and surged over 180 percent in the past year, positioning it as one of the standout performers in the US stock market.

Conclusion: Navigating Volatility

As Nvidia’s share price grapples with uncertainties surrounding SMCI’s earnings and broader market trends, investors must carefully monitor support levels and market dynamics. While short-term fluctuations are inevitable, the stock’s strong performance over the long term underscores its resilience and potential for growth in the tech sector.

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