Sign InNVIDIA Faces Major Downturn Amid Trade Tensions, Yet Holds Long-Term Growth Potential
Summary
On April 4, 2025, NVIDIA's stock plummeted to $94.31 amid trade tensions, yet its deeply oversold status and strong growth potential suggest significant long-term investment opportunities as geopolitical conditions stabilize.
Technical Analysis
NVIDIA Corporation's (NVDA) stock witnessed a significant downturn, closing at $94.31 on April 4, 2025, reflecting a substantial decline of 7.36% for the day. The drop is part of a broader decline in the technology sector, driven by recent trade tensions and tariffs imposed by the US and China. NVDA's current RSI stands at 21, indicating that the stock is deeply oversold, potentially providing a near-term bounce opportunity. However, the stock price is trading below its 50 and 200-day moving averages, indicating a sustained bearish trend over the medium to long term.
The MACD also shows a negative divergence, affirming the bearish sentiment. The current volume of 525.61 million shares significantly surpasses the average volume of 286.58 million, suggesting a strong sell-off. Despite the downward pressure, the ATR at 6.44 shows that the stock may continue to experience significant price volatility in the near term. The next resistance level is far above at $114.06, indicating limited upward momentum unless a strong reversal occurs.
Fundamental Analysis
Fundamentally, NVIDIA is a technologically robust company centered on AI and semiconductor technology, both of which have significant growth potential. The company's P/E ratio of 32.08 indicates that it is priced aggressively relative to its earnings, suggesting a high growth expectation from investors. However, its low dividend yield of 0.08% (TTM) reflects a strategy focused on reinvesting profits into growth initiatives rather than returning cash to shareholders.
NVIDIA's intrinsic value, as assessed through DCF analysis, is approximately $165.65, implying the stock is undervalued based on its current market price of $94.31. This suggests significant upside potential if the market conditions stabilize and fundamentals drive the stock price.
Market Dynamics and News Impact
Recent news highlights severe downward pressure due to geopolitical tensions and trade tariffs initiated by President Trump, impacting not only NVIDIA but the entire semiconductor industry. Such tariffs could adversely affect NVIDIA's supply chain and sales, especially in international markets. However, volatility could present long-term buying opportunities if one considers NVIDIA's potential for recovery and growth in the high-demand AI and semiconductor sectors.
Stock Performance Predictions
For the next trading day, ongoing volatility is anticipated as the markets digest the impacts of the tariffs and potential global recession risks. The deeply oversold RSI suggests a possible short-term technical rebound. Over the coming week, price movement will largely depend on market sentiment regarding trade policies and broader technology sector performance.
Long-term Investment Potential
Over the long term, NVIDIA holds substantial potential due to its leadership in AI and graphics processing technology. With an optimistic consensus target price, especially the high target of $250, analysts appear bullish on its recovery and growth prospects once macroeconomic conditions improve. The industry outlook remains positive, with strong demand potential in gaming, data centers, and automotive sectors.
Overall Evaluation
Based on the current analysis, NVDA is categorized as a 'Hold' candidate. This assessment considers the present bearish technical indicators and geo-political risks that challenge short-term performance. Nevertheless, price depression coupled with strong intrinsic value offers significant medium-to-long-term appreciation potential to investors with a longer horizon, assuming stabilization in macroeconomic conditions.
