The Nvidia stock price has crashed in the past few weeks as investors remain concerned about the artificial intelligence industry after last week’s Oracle and Broadcom earnings. NVDA dropped to $175, down sharply from the year-to-date high of $211, meaning it has erased over $750 billion in value.
Why the Nvidia stock price has crashed
Nvidia and other top companies in the artificial intelligence industry have plunged in the past few days as jitters have accelerated.
These jitters accelerated last week after Oracle and Broadcom published their quarterly results. Oracle, which has become a major player in the sector, has dropped by over 45% from its highest point this year.
While the company’s remaining performance obligations (RPO) surged to over $525 billion, the company’s debt has soared and its free cash flow has turned negative. Worse, the company has some maturities coming up, raising concerns about its ability to pay.
Broadcom stock dropped as investors questioned its growth trajectory even as it announced huge deals, including one with Anthropic, one of the biggest competitors to OpenAI.
Therefore, the ongoing Nvidia stock price crash is not necessarily because of its fundamentals. Instead, it is a thematic drop as investors dump companies in the industry, including infrastructure players like CoreWeave, IREN, and Bitfarms.
Nvidia has become a bargain
The ongoing Nvidia stock price crash has left behind a company that is undervalued by most measures.
Data compiled by SeekingAlpha shows that the company has a forward price-to-earnings ratio of 38, much lower than the five-year average of 57. Its Non-GAAP PE ratio stands at 37, also much lower than the five-year average of 45.
Nvidia’s forward PE ratio is much higher than the S&P 500 Index’s average of 23. However, this difference is justified by the company’s strong revenue and profitability growth and its moat in the artificial intelligence industry.
The most recent results showed that the company’s growth accelerated in the third quarter as demand for its chips soared. It made $57 billion in revenue, up sharply from the $46 billion it delivered in the second quarter and the $35 billion it made in the same period in 2024.
The company’s profitability also accelerated in the period, with its net profit jumping to $31 billion, up sharply from the $19 billion it made last year.
The ongoing jitters about the AI bubble are justified. However, chances are the Nvidia will continue growing as companies in the industry are not slowing down their deployments.
As a result, Wall Street analysts believe Nvidia’s business will continue doing well in the foreseeable future. For example, the average estimate is that the company’s revenue will come in at $65 billion in the fourth quarter, bringing its annual figure to $213 billion.
This estimate does not include shipments of the 200 chips that the Trump administration authorized last week. As such, if these shipments start, there is a possibility that the revenue will be much better than expected, a move that will justify the current valuation metrics.
Nvidia share price technical analysis
The daily timeframe chart shows that the Nvidia stock price has plunged in the past few months, moving from the year-to-date high of $211 to the current $175. It has even moved slightly below the 50-day and 100-day Exponential Moving Averages (EMA), which is a risky move.
However, on the positive side, the stock has formed a rising broadening wedge, which is also known as a megaphone. It is now along the lower side of the megaphone pattern.
Therefore, the most likely scenario is where the stock rebounds, potentially to the upper side of wedge, which is at $211. This target is about 21% above the current level. On the other hand, a move below the support level at $170 will invalidate the bullish outlook.
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