NVIDIA Faces Short-Term Volatility Amid Strong Long-Term Fundamentals and Earnings Pressure

Technical Analysis

NVIDIA (NVDA) closed at $113.54 on May 6, 2025, down marginally by 0.25%. The intraday range between $110.82 and $114.74 indicates moderate volatility, with price currently hovering just above the 50-day moving average of $112.03, a mildly bullish signal in the short term. The proximity to resistance at $114.06 is notable; failure to break above this level could suggest consolidation or a slight retracement. The 200-day moving average at $125.08 remains well above current price, signaling the longer-term trend is still in a corrective phase since the all-time high of $153.13.

The RSI14 at 52 is neutral, indicating a balanced momentum on the brink of either bullish or bearish dominance. The MACD’s negative value (-0.87) over the past three months implies bearish momentum pressure, although this could be temporary given the near-average RSI. The ATR of approximately $4.98 signals expected daily price fluctuation around $5, reflecting sustained volatility. Support levels stand at $108.37 (stop-loss) and a more significant support at $97.64, the latter providing a safe downside buffer should weakness persist.

Volume at 148.18 million is below the average daily volume of 286 million, suggesting reduced market participation which often precedes directional moves. For the next trading day (May 7), the stock is likely to test resistance near $114; a decisive break could lead to a short-term rally towards $118-$120. Conversely, failure to surpass resistance would increase probability of a pullback towards the 50-day MA or the stop-loss area near $108.

Over the coming week, the pending May 28 earnings announcement is expected to elevate volatility and trading volumes; until then, range-bound trading between $108 and $114 seems most probable.

Fundamental Analysis

NVIDIA’s market capitalization stands at approximately $2.77 trillion, reflecting its status as a mega-cap leader in semiconductors and AI infrastructure. The trailing twelve months EPS of $2.94 against a current price of $113.54 yields a P/E ratio of 38.62, which, although historically elevated, is not unusual for a growth-driven technology stock with significant AI and data center exposure. The discounted cash flow (DCF) intrinsic value at about $146.95 implies a roughly 30% upside from current prices, showcasing substantial undervaluation on a fundamental basis, assuming cash flow growth projections hold.

Analyst consensus further supports bullish fundamentals: target prices cluster strongly around $174, with highs up to $195 and consensus ratings classified as a “Buy” by the majority (55 buy, 15 hold, 3 sell). The long-term growth narrative centers on NVIDIA’s dominant position in AI chipsets, GPUs, and data center acceleration. Intrinsic value appreciation is expected to be driven by expanding AI market penetration and new semiconductor process technologies.

However, trade tensions and export restrictions, particularly concerning the Chinese AI market, remain a source of risk. The $5.5 billion quarterly charge related to the China H20 chip shipment ban hints at near-term earnings headwinds. CEO Jensen Huang’s comments on the significance of access to China’s AI sector underline geopolitical sensitivity which could impair revenue growth if unresolved.

Intrinsic Value and Long-Term Potential

The DCF model suggests a fair value near $147, a substantial premium to the current trading level, indicating that the market may currently undervalue NVIDIA's long-term cash generation capabilities. This intrinsic valuation assumes steady AI adoption and successful navigation of geopolitical risks. Given NVIDIA’s strategic positioning and innovation leadership, long-term investment potential remains strong, contingent on its ability to sustain global supply chains and expand AI ecosystem participation. The firm’s diversified operations across gaming, professional visualization, and data centers anchor the revenue base beyond immediate AI disruptions.

Overall Evaluation

NVDA is best classified as a Hold with a short-term view due to near-term volatility risks around tariff-related uncertainties and upcoming earnings. Technically, the stock needs to break resistance decisively to confirm renewed upward momentum; otherwise, a consolidation phase is likely.

From a medium- to long-term perspective, the fundamental outlook is robust with a significant intrinsic value premium and strong analyst bullishness. Absent major geopolitical escalations, the company’s growth trajectory remains intact, supporting positive returns beyond the next quarter.

In conclusion, while short-term price action suggests caution given tariff-related earnings pressure and pending earnings, the stock’s fundamental strength and significant intrinsic value gap imply favorable longer-term prospects.