NVIDIA Stock Sees 5% Drop Amid Bearish Sentiment; Short-Term Rebound Possible But Caution Urged

Technical Analysis

NVIDIA Corporation's stock (NVDA) closed at $106.98 on March 10, 2025, marking a significant decrease of 5.07% from the previous day, underlining a bearish sentiment. The trading volume was 361.43 million, notably above the average volume of 265.51 million, suggesting a surge in sell-off activity. The Relative Strength Index (RSI) is at 25, indicating that the stock is oversold and could be due for a short-term bounce. The 50-day and 200-day moving averages stand at $131.15 and $127.33, respectively, both well above the current stock price, reaffirming a downtrend. The MACD is slightly positive at 0.16, not offering a strong buy signal. The Average True Range (ATR) is 6.61, implying high volatility.

Short-term Outlook

Given the oversold RSI and significant drop in value, a short-term rebound could be anticipated in the next trading session, although any upward move may encounter resistance around $118.42. For the upcoming week, unless there is a significant change in sentiment or supportive news, further downward pressure could sustain.

Fundamental Analysis

With a market capitalization of $2.61 trillion, NVIDIA is a dominant player in the AI and data center markets, as evidenced by its broad market influence and strong fundamentals. Despite recent volatility, the stock maintains a PE ratio of 36.39, reflecting somewhat high valuations likely due to growth expectations in AI. Earnings per share (EPS) is 2.94, indicating decent profitability.

The dividend yield of 0.07% based on TTM is modest but aligns with the company's growth focus. The discounted cash flow (DCF) analysis values the stock at approximately $180.84, suggesting that its intrinsic value far exceeds its current trading price. This implies a potential undervaluation based on expected cash flows.

Long-term Investment Potential

NVIDIA is a key player in the AI revolution, a sector experiencing rapid growth. The company's position in data center and AI chip markets is solid, and long-term growth prospects remain robust despite short-term headwinds. Concerns such as potential tariff impacts on free cash flow margins and increasing receivable days should be monitored.

Analyst targets range from $140 to $250, with a consensus near $179.64, indicating overall positive long-term sentiment. Given the strong buy-to-hold ratio in analyst recommendations, market confidence in NVIDIA's long-term trajectory remains high.

Overall Evaluation

Categorizing NVIDIA Corporation as a 'Hold' may be most appropriate at present. The oversold RSI suggests potential for a rebound; however, negative short-term sentiment following recent market performance urges caution. Long-term fundamentals are strong, particularly within AI markets, yet immediate uncertainties preclude labeling it a 'Buy.' Market conditions and company developments should be closely watched for clearer indication of trend reversals or further risks.