Nvidia (NVDA) Shares Fall Despite Strong Earnings

Yesterday, after the close of the main trading session, Nvidia released its second-quarter earnings report:

→ Earnings per share: actual = $0.67, expected = $0.647;
→ Revenue: $30.04 billion, expected = $28.737 billion;
→ The company also announced a $50 billion share buyback.

However, despite the strong results, Nvidia’s share price declined. While the closing price yesterday was above $125, in pre-market trading today, Nvidia's shares are down below $118.

The more than 6% drop may be due to:
→ The company’s future outlook not meeting investor expectations;
→ Waning bullish sentiment around AI adoption.

On 12 August, during a technical analysis of NVDA’s price chart, we noted:
→ The price was forming an upward channel (indicated in blue);
→ The $100 level was acting as support.

Assuming the bearish momentum from the earnings reaction continues, Nvidia’s shares may open trading today around $115, close to the lower boundary of the current upward channel.

New data provides crucial insights for further predictions:
→ After retreating from the $130 resistance level, the price is likely to form a broad bearish gap around the $120 level, which could act as a future resistance zone.
→ The median line of the blue channel may then act as resistance, increasing the likelihood of a bearish breakout below the channel’s lower boundary.

Meanwhile, analysts remain optimistic. According to a Tipranks survey, 33 out of 36 analysts recommend buying NVDA stock. While the average price target is $150 over the next 12 months, it’s possible that these estimates could be revised downward if bearish sentiment intensifies.

Read analytical NVDA price forecasts for 2024 and beyond.

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