Nvidia shares plunged Monday amid concerns that a powerful, cost-efficient AI model developed by a Chinese startup could herald a reduction in Big Tech’s investment in the chipmaker’s pricey AI offerings.
The stock broke down below a seven-month rising wedge and finished the session below the closely watched 200-day moving average, potentially setting the stage for follow-through selling.
Investors should watch crucial support levels on Nvidia’s chart around $102, $96, and $76, while also monitoring a key overhead area near $130.
Nvidia (NVDA) shares plunged Monday amid concerns that a powerful, cost-efficient AI model developed by Chinese startup DeepSeek could herald a reduction in big tech’s investment in the chipmaker’s pricey AI offerings.
In recent years, hyperscalers, such as Microsoft (MSFT), Alphabet (GOOG)(GOOGL) and Amazon (AMZN) have spent billions of dollars purchasing the company’s AI platforms as they ramp up their infrastructure to power surging demand for the emerging technology. That spending has propelled Nvidia to become one of the world’s most valuable companies.
Nvidia shares fell 17% to $118.58 on Monday, shedding nearly $600 billion in market capitalization. Even with the steep decline, the stock has still nearly doubled over the past 12 months and has jumped more than eight-fold since the launch of OpenAI’s ChatGPT in November 2022.
Below, we take a closer look at Nvidia’s chart and apply technical analysis to identify crucial price levels worth watching after today’s rout.
Nvidia shares on Monday broke down below a seven-month rising wedge and finished below the closely watched 200-day moving average (MA), potentially setting the stage for follow-through selling.
Importantly, Monday’s selloff occurred on the highest daily trading volume since May, indicating significant portfolio rebalancing by larger market participants.
Let’s identify three crucial support levels on Nvidia’s chart that investors may be watching and also point out a key overhead area to monitor during upswings.
Firstly, it’s worth keeping track of the $102 level. The shares could encounter support in this area near the opening price of a late May breakaway gap, which also closely aligns with the early-September trough.
A close below this level raises the possibility of a fall to around $96, a location on the chart where investors could seek buying opportunities near the March twin peaks and early-August selloff low.
A more significant correction in the AI chipmaker’s stock could spark a decline to the $76 level. This region, around 36% below Monday’s closing price, may attract bargain hunters looking to accumulate shares near last year’s prominent mid-April swing low.
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