Nvidia (NVDA) Stock Correction Offers Buying Opportunity for Bulls

TLDR

Table of Contents

Nvidia stock dropped 2.9% to $135.13 on Monday as post-earnings rally paused
Trade tensions between US and China weigh on investor sentiment with potential impact on chip sales
Technical indicators remain bullish despite pullback, with key support at $130 and resistance at $143-$150
Company reported strong Q4 revenue of $44.06 billion, up 69% year-over-year, beating Wall Street estimates
Recent multi-year deal with Saudi Arabian AI firm provides long-term growth catalyst outside China market

Nvidia shares fell 2.9% to $135.13 on Monday as the chip maker’s recent rally took a breather. The pullback comes after the stock surged more than 50% from April lows over the past month.

Trade tensions between the United States and China appear to be weighing on investor sentiment. China’s Ministry of Commerce said the White House had “severely undermined” consensus reached at Geneva trade talks. This follows President Trump’s comments that China “has totally violated its agreement” with Washington.

The trade dispute could hurt Nvidia’s business directly. In April, Trump banned sales of the company’s advanced H20 chips to China. CEO Jensen Huang called the measures “a failure” and said they would reduce sales by about $15 billion.

Despite Monday’s decline, Nvidia’s technical picture remains strong. The stock recently broke out from a bullish flag pattern with robust volume and institutional buying. This breakout suggests the upward trend could continue.

Technical Indicators Point Higher

Key momentum indicators support the bullish case. The Relative Strength Index sits at 66, showing strength without being overbought. The MACD remains in positive territory with a widening histogram.

A golden cross formation adds to the positive technical outlook. The 50-day moving average crossed above the 200-day moving average, a traditionally bullish signal. The 50-day average now sits at $121 while the 200-day is near $107.

Resistance levels to watch include $143, matching February’s local high, and $150, a key psychological level. A break above $150 could trigger a rally toward $160 based on the flag pattern’s measured move.

Support sits at $130, aligning with recent consolidation. Stronger support levels are at $121 and $115, just above the 50-day moving average.

Strong Fundamentals Back Stock Performance

The company’s recent earnings results support the technical strength. Nvidia reported quarterly revenue of $44.06 billion, up 69% year-over-year. This beat Wall Street estimates despite absorbing a $4.5 billion charge from export restrictions on H20 chips in China.

NVIDIA $NVDA JUST REPORTED EARNINGS
EPS of $0.81 beating expectations of $0.75🟢
Revenue of $44.1B beating expectations of $43.25B🟢 pic.twitter.com/4ourFPPY7e
— Evan (@StockMKTNewz) May 28, 2025

Nvidia’s dominance in GPU and data center markets drives this growth. These products are critical for AI model training and inference workloads. The AI revolution continues to fuel demand for the company’s chips.

A recent multi-year agreement with a Saudi Arabian AI firm provides another growth catalyst. The deal will deploy hundreds of thousands of Nvidia’s next-generation GPUs across Middle Eastern data centers. This partnership offers geographic diversification away from China restrictions.

Nvidia’s quantitative ratings reflect its strong performance. The IBD SmartSelect Composite Rating stands at 97, outperforming 97% of all listed stocks. The Earnings Per Share Rating hits 99, showing exceptional profit growth.

CEO Jensen Huang outlined AI reasoning, AI agents, and sovereign AI infrastructure as key growth drivers. Upcoming Blackwell-based AI server deployments in late 2025 are expected to spark new capital spending from hyperscalers and enterprises.

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