NVIDIA Stock Faces Technical Caution Ahead of Earnings Amid Bullish Long-Term Growth Prospects

Technical Analysis

NVIDIA's (NVDA) stock closed at $131.30 on May 23, 2025, down 1.15% from the prior session, trading within an intraday range of $129.17 to $132.68. The relative strength index (RSI) stands at 78, indicating a technically overbought condition that may lead to short-term profit-taking. The stock price is currently just below the resistance level of $131.80 and above key support at $120.15. The 50-day moving average of $114.48 supports a near-term uptrend, while the 200-day moving average at $126.00 has recently been tested but not decisively breached on the downside, suggesting some consolidation phase. The MACD is strongly positive at 8.91, consistent with upward momentum despite the recent pullback. Average true range (ATR) at 3.69 signals moderate volatility. Trading volume on May 23 was below average, possibly hinting at reduced conviction during the pullback.

For May 27, 2025, the technical outlook suggests potential short-term volatility ahead of earnings, with price likely to test resistance at ~$131.80. A breakout above this level could extend gains, but RSI overbought conditions caution against aggressive entries. For the upcoming week, price action depends heavily on May 28 earnings results; failure to clear resistance decisively could lead to a retracement toward support near $120.

Fundamental Analysis

NVIDIA’s market capitalization is approximately $3.20 trillion, reflecting its dominance in the semiconductor and AI chip markets. The trailing twelve months (TTM) earnings per share (EPS) is $2.94, with a price-to-earnings (P/E) ratio of 44.66, highlighting high growth expectations priced into the stock. The discounted cash flow (DCF) model suggests an intrinsic value around $144.04, approximately 10% above the current price, indicating moderate upside on a fundamental basis.

Upcoming earnings on May 28 are highly anticipated given the company’s recent contract with Oracle, involving $40 billion worth of Nvidia chips for AI data center infrastructure. This sizable order is a strong bullish catalyst, confirming NVIDIA’s leadership within AI hardware and its critical role in the expanding AI ecosystem. Consensus analyst targets range between $150 (low) and $190 (high), with a median target at $175, emphasizing favorable long-term earnings growth expectations.

Sell-side sentiment shows a consensus "Buy" with 57 of 75 rated analysts favoring “Buy” or “Strong Buy,” reinforcing confidence in the stock's growth trajectory. However, notable is the high P/E, implying valuation risk if growth disappoints post-earnings.

Intrinsic Value and Long-Term Investment Potential

The current share price of $131.30 is below the intrinsic value estimate of $144.04, supporting a slight fundamental undervaluation. NVIDIA’s exposure to AI, data centers, and advanced chip technologies positions it favorably for sustained long-term revenue growth. The large Oracle deal and continued expansion into AI workloads provide durable competitive advantages. While the high valuation reflects elevated expectations, the company’s strong earnings growth and industry leadership justify a premium.

Sustainability of earnings growth will hinge on execution of product innovation and maintaining dominance in AI chip supply chains alongside managing macroeconomic risks and valuation pressures.

Overall Evaluation

NVIDIA presents as a *Hold* candidate ahead of the May 28 earnings announcement due to technical overbought conditions and potential short-term volatility. Post-earnings, the fundamental outlook remains bullish, supported by strong institutional interest and a compelling growth narrative in AI hardware. If earnings and guidance meet or exceed expectations, the stock could retest and potentially exceed near-term analyst targets above $150, enhancing its long-term attractiveness.

The balance of technical caution with fundamental strength suggests holding current positions and monitoring earnings closely before increasing exposure. The company’s intrinsic value and dominant market position underpin solid long-term investment potential despite near-term price fluctuations.