Nvidia (NVDA) Stock Dips Below Moving Averages Amidst Cramer’s Warning and China Probe
Nvidia’s shares experienced a downturn, falling below key short-term moving averages, sparking concerns about potential support level tests. This dip comes amidst a warning from CNBC’s Jim Cramer, who predicted a “vicious” and “fast” market correction for the stock, despite its impressive 174% surge this year. The stock closed at $132.00, down 1.68% on Monday, and further dipped in after-hours trading to $130.95. Technical analysis reveals that NVDA’s price is currently below its 8-day, 20-day, and 50-day simple moving averages, signaling potential short-term weakness. However, it remains above its crucial 200-day moving average, suggesting a longer-term uptrend may still be intact. The Relative Strength Index (RSI) of 40.18 indicates a neutral market sentiment, neither overbought nor oversold.
Cramer’s cautionary message on X (formerly Twitter) added fuel to the concerns. He highlighted the absence of a “crescendo moment” in Nvidia’s price action, anticipating a sharp and swift reversal. This warning coincides with increased regulatory scrutiny in China, where an antitrust investigation into Nvidia’s 2020 acquisition of Mellanox Technologies was launched last week. The probe focuses on potential anti-competitive practices, including whether Nvidia uses bundled AI chips with Mellanox’s NVLink technology to limit competition.
However, not all analysts share Cramer’s bearish outlook. Steven Strazza, director of research at All Star Charts, offered a contrarian perspective, noting that momentum remains strong and that the semiconductor sector is regaining traction, with several major players hitting all-time highs. He highlighted robust support levels for Nvidia, viewing the recent dip as a minor shakeout. Strazza’s analysis suggests a risk-reversal pattern, hinting at further potential upside.
Adding further context, TF Securities analyst Ming-Chi Kuo anticipates the Chinese antitrust investigation will remain unresolved for some time, drawing comparisons to Qualcomm’s 15-month antitrust case in China. Despite the recent volatility, the consensus price target for Nvidia among 40 analysts tracked by Benzinga stands at $170.56, with a high of $220 and a low of $120. The average price target from DA Davidson, Phillip Securities, and Truist Securities suggests an 18.11% upside potential from current levels.
The current situation presents a mixed outlook for Nvidia investors. While short-term technical indicators suggest potential weakness and regulatory concerns linger, some analysts remain optimistic about the long-term prospects of the company, particularly given its strong position in the rapidly expanding AI sector. The market reaction to the recent dip, and the outcome of the Chinese antitrust probe, will be crucial factors influencing the stock’s price trajectory in the coming weeks and months. Investors should carefully consider all available information and diversify their investment portfolios accordingly. This analysis is for informational purposes only and should not be considered investment advice.
