Nvidia Plunges In Thursday's Premarket: What's Behind Stock's Incessant Sell-Off?

Nvidia Corp. NVDA stock appears on track to fall yet again on Thursday as macroeconomic concerns sap the risk appetite of traders.

Nvidia Woes: Despite Nvidia’s earnings getting high praise from sell-side analysts, investors have been incessantly selling the stock on fears that the Jensen Huang-led company can’t keep on delivering superlative financial performance. The stock peaked at $140.76 on an intraday basis on June 20, shortly after the stock split took effect and the ex-dividend date. The record closing high is $135.58 reached on June 18.

Nvidia shares were on a broad consolidation move since then before the yen carry trade unwinding wrecked the global markets and the artificial intelligence stalwart’s stock came down with them.

On the day of the Aug. 5 global sell-off, the stock hit a low of $90.69 and bottomed at $98.91 on a closing basis two sessions later. Even as it staged a comeback, the second-quarter earnings report served as a downside trigger despite the company reporting year-over-year and sequential earnings and revenue growth. Revenue from data center revenue, a segment that includes hardware, especially AI accelerators sold to cloud service providers, reached a record. The third-quarter revenue guidance, though upbeat, was panned by some as marking the smallest increase relative to the consensus in several quarters.

A lack of resolution regarding the Blackwell 200 shipment timing also exerted downward pressure.

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Macro Shock: The stock’s struggles aggravated further as soft economic data stirred recession concerns and this heavily impacted growth stocks. To make matters worse, reports of a Department of Justice subpoena regarding monopoly in AI chips did the rounds although the company denied it.

After the recent weakness, the stock trades at a forward price/earnings multiple of 37.88. Most analysts, convinced of its AI supremacy, recommend buying the stock on its weakness.

Immediate support is around $103.6 and a break below the level could take the stock to $101.50, the level to which it gapped up in late May. On the further downside, it could drop to the psychological resistance of $100. The next support is around the $95 level.

On the upside, overhead resistance is around $106.5 and around the $115 level.

Source: Benzinga Pro

In premarket trading, the stock fell 0.89% to $105.26, according to Benzinga Pro data, with the weakness aggravating after a very weak ADP payrolls report.

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