Nvidia (NASDAQ:NVDA) has not sidestepped the disaster we have in tech stocks. NVDA stock is hitting fresh lows on Thursday, despite a solid bounce in many growth stocks. With shares down more than 54% from the high, it’s time to start taking a closer look at its fundamentals.
There are legitimate fears about PC demand and a global recession. Those fears may be true, but so are the realities. Realities like the strong earnings reports we have seen from the semiconductor industry over the last several weeks. More specific to Nvidia, Advanced Micro Devices (NASDAQ:AMD) just reported a top- and bottom-line beat with a better-than-expected outlook.
These types of reports are hard to dismiss — even though the market is doing just that right now.
Further, we know that the cyclical part of the economy could struggle. However, the secular part should be just fine and that’s exactly the end-market that Nvidia deals with. You know: Cloud-computing, datacenters, gaming, artificial intelligence and machine learning, drones, robotics, autonomous driving, supercomputing, graphics and design, etc.
These markets are not going to disappear overnight and there will be consistent demand for Nvidia for the rest of this decade. That’s true even if there isn’t demand for NVDA stock at the moment.
This is one of the few companies that, short of a change in its business, I just cannot turn long-term bearish on. Despite the turmoil in the market, analysts still expect 30% revenue growth and 27% earnings growth this year. That doesn’t exactly spell disaster to me.
As far as the charts are concerned, we were a bit early on our long call in the low $290s. That said, we saved ourselves almost $100 a share by not rushing into NVDA stock in March.
We’re now trading down into a potential area of interest. It’s the 61.8% retracement as measured from the November 2021 high down to the March 2020 Covid-19 low. The prior breakout zone near $145 to $155 is also nearby, along with the 161.8% downside extension of the smaller six-month range.
Does that mean NVDA stock is at or near a bottom? No, it does not!
It means that the stock is trading down into a prior area of interest and for those with a long-term objective, accumulating some shares is not the worst idea with Nvidia down about 55% from the high.
Note that “accumulating” would not suggest an all-in back-up-the-truck type of allocation. Because if support does fail to materialize here — or if it does but NVDA stock later moves lower — we could be looking at a test of the $110 to $120 area.
On the date of publication, Bret Kenwell held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.