Is Nvidia A Buy? Only If Shares Fall Further, Says Miller Tabak Analyst

NVIDIA Corporation NVDA, a hot stock since at least 2016, is now down 6 percent over the past five trading sessions and opened at $229.58 on Wednesday. Investors are naturally evaluating the near-term weakness and questioning whether Nvidia is a buying opportunity at current levels.

The Analyst

Miller Tabak's Matt Maley was a guest on CNBC's "Trading Nation" on Tuesday.

The Thesis

Nvidia's stock has gained around 500 percent since 2016 and soared 27 percent in January alone, Maley said. But taking a step back might provide some explanation for the decline, as the stock has reached a premium of over 250 percent to its 200-week moving average. Investors could conclude the stock has become "ridiculously overbought," but for it to become attractive again for investors, it needs to pull back close to the $200 level — which would imply an approximately 9-percent decline, Maley said. 

At around $204 per share, the stock would trade back to its 100-day moving average, which has historically served as a "great support" level, Maley said. At least from a technical point of view, this would be a good entry point for investors looking to buy or add to their position, he said. 

But even if Nvidia's stock falls 20 percent from current levels, it would be seen as a move that is "nothing" compared to the massive triple-digit gain over the past two years, the analyst said.

Price Action

Shares of Nvidia were trading higher by 3.61 percent at $233.73 late Wednesday morning.

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"Destiny 2" screenshot courtesy of Nvidia.