Nvidia Gets Burned On Earnings: This Chart Shows More Pain Ahead

Summary:

• NVIDIA Corporation NVDA took a beating on Friday, trading 19 percent in the afternoon session.
• The devastation came after the company posted mixed earnings, as well as guidance that missed Wall Street expectations.
• However, we expect a bounce in early December, after the stock is subjected to additional near-term pain.

Nvidia Corporation Stock Weekly Chart

The chipmaker reported earnings per share of $1.84 and total revenue of $3.18 billion, compared to analyst estimates of $1.71 and $3.24 billion. With regards to guidance, management estimated $2.65-2.75 billion, below the average analyst estimate of $3.4 billion.

“We were clearly wrong on the stock, as we underestimated the magnitude of the channel inventory build in mid-range Gaming GPUs,” explained Goldman Sachs analyst Toshiya Hari. Goldman then removed Nvidia from its “conviction” list, though maintained a Buy rating with a new price target of $200.

In analyzing the market cycles for Nvidia, we can see that it continues to trade in the declining phase of its current cycle. The stock previously broke cycle support, around $239, which is the point at which it started the current cycle. We have had a negative outlook since then. Our current projection is for a decline to around $152, and then a bounce in December.

Related Links:

The Chips Are Down: Weak Forecasts Hurt Semiconductor Stocks

What To Do With Nvidia's Stock After 20% Fall?