Is Nvidia’s Stock Price (NVDA) Correction An Early Gift?

Nvidia's stock (NASDAQ: NVDA) has pulled back markedly in recent days, retracing to levels not seen in 2 months, after what has been another mammoth year. The leading name in the AI semiconductor market, has experienced significant volatility in its stock performance this year, although mostly to the upside.

Despite a strong upward trend earlier in the year that has driven NVDA to 170% in gains on a year-to-date basis, Nvidia's shares have now pulled back more than 10% in the past two weeks.

Now officially into correction territory, there are many wondering whether this is an early Christmas gift to take advantage of, or whether there is more downside to come?

Looking at recent support and resistance levels, the $130 level appears to be holding firm for now. Despite a drop in early trading to $126.86, Nvidia's stock price is ended the most recent session down 1.22% on the day at $130.39. Looking at the chart above, there is a lot of pull towards $130, and this could prove to be a pivotal level in charting the next leg for NVDA.

The realm of stock trading involves finding value, and a considerable amount of timing. In retail a lot of traders look to follow the trend (which is a sensible strategy), yet holding a shortlist of names, and target prices for entry is a great move for building a stock portfolio for those you wish to hold longer term. There are many who have likely looked and Nvidia's stock in the past and told themselves ‘I will buy if it get's cheaper', only to find that when a price retraces, the natural instincts take over and questions about why is it falling enter the head.

If you have already built a target price into your plan based on fundamental analysis, you can more easily enter positions on a pullback when they hit, without being overly concerned about the micro movements. This is more value investing than trading, but could suit certain risk profiles better.

We cannot tell you whether Nvidia's stock is cheap or not, but if you liked the fundamentals of the business and the value it offered at $150, it would make sense to like it more at $130. The psychology of pricing can be one of the biggest challenges in markets, and there is no right answer for all.

Analysts View

Operationally, Nvidia's strategic plans have encountered obstacles, most notably with its highly anticipated Blackwell GPU. Originally scheduled for launch in the fourth quarter of this year, the full production and revenue will not be seen until early next year, roughly 3 months after originally intended.

Broadcom's recent earnings, and transparency over outlook until FY 27 has also coincided with the pullback in Nvidia, yet analysts remain firmly bullish.

From a financial metrics perspective, Nvidia's price-earnings ratio stands at 51.47, indicating a high valuation compared to the market average, but one which in recent times has been very well earned.

Truist have recently raised their price target to $204 from a $169, retaining their Buy rating. Whilst the firm remain cautious on AI and semiconductors in general as sectors, they expect 2025 to be another dominant year for the company's full technology stack. An additional $35B total addressable market is expected to open up with a client-side CPU launch.

The consensus mark on the street of $172.38 reflects a potential upside of more than 20% from current price action, with the low target of $130 close. With significantly greater perceived upside from analysts than to the downside, there could be further support to come as portfolios are rebalanced into the end of year and new year period.

While Nvidia remains a critical leader in the semiconductor industry, the current market conditions reflect investor caution, possibly due to strategic shifts and product launch delays. The coming days could prove to be critical as Nvidia navigates these challenges, and its ability to stabilize and further grow will be closely watched by market participants.

The next catalyst could be just around the corner, and shopping here on a discount could prove to be a good move long-term. On the flip-side, there could be further downside to the next level of support if this one breaks, if the bears do not come back in at these levels. As usual, ensure you conduct your own due diligence and risk management, and ensure you have target prices and a plan in place before taking any position, in any market.