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Tuesday - Raymond (NSE:RYMD) James has identified signs of technical deterioration in NVIDIA Corporation (NASDAQ:NVDA), suggesting the stock may be entering an intermediate-term corrective phase. Analysts at the firm pointed to weakening price momentum, a close below a key technical level, and deteriorating relative strength compared to the S&P 500 as indicators of potential further downside for NVIDIA shares.
According to Raymond James, NVIDIA’s stock has closed below the crucial 40-week moving average, a move that could confirm a new intermediate-term downtrend if sustained over multiple weeks. Despite the recent volatility, NVIDIA maintains impressive fundamentals with a perfect Piotroski Score of 9 and strong financial health metrics, including a current ratio of 4.1. The stock’s price momentum and relative strength indicators have also been weakening, which are seen as negative signals by the analysts. They believe that if NVIDIA’s stock maintains a close below the 40-week moving average, currently around $124.81, it could face a significant decline towards the $94.27 support level, implying a further drop of approximately 20.4% from current levels.
The firm also highlighted broader market concerns, referencing a potential 4-Year Cycle reset developing in 2025, which could indicate a cyclical bear market. This view is supported by the performance of market leaders like NVIDIA and the VanEck Semiconductor ETF (SMH), which also closed below its own 40-week moving average. Such technical breakdowns are often associated with the topping phase of 4-Year Cycles.
Raymond James analysts believe that the semiconductor sector, traditionally a market leader, is showing signs of vulnerability. The lack of new highs in the SMH, despite recent market rallies, suggests to the analysts that the sector may not be able to sustain its leadership position. This could signal a shift to Phase 3 of the Market Cycle Model, where portfolio managers rotate out of cyclical leaders and into more defensive areas in anticipation of a weakening economic environment.
The technical analysis by Raymond James underscores three main concerns for NVIDIA: weakening price momentum, deteriorating relative strength, and a potential negative turn in the intermediate-term price trend. These factors, taken together, could indicate that NVIDIA’s stock is at risk of entering a corrective phase in the coming months. However, the company maintains strong fundamentals with remarkable revenue growth of 152% and gross profit margins of 76%.Access the complete NVIDIA Pro Research Report and detailed financial analysis through InvestingPro, where you’ll find expert insights and comprehensive metrics to make informed investment decisions.
In other recent news, NVIDIA has been in the spotlight due to various developments. Earnings and revenue results have been impressive with Q3 2025 revenue soaring 94% year-over-year to $35.1 billion, driven by robust demand for its AI-enabling GPUs. Additionally, the company has shown a 152% revenue growth and a 76% gross profit margin over the last twelve months, demonstrating its dominant position in the AI chip market.
Analysts have given mixed reviews. Tigress Financial Partners raised NVIDIA’s stock to a Strong Buy with a $220 target price, while DA Davidson maintained a Neutral rating with a $135 target. UBS and Itau BBA have maintained their Buy and Outperform ratings respectively, expressing confidence in the company’s ability to post strong financial results in the upcoming quarters.
NVIDIA’s recent product announcements at CES 2025 and its strategic position in generative AI applications have been highlighted. The company also defended its AI strategy amidst the launch of Janus-Pro-7B by DeepSeek and concerns about the Chinese AI startup.
Retail investors set a new record by purchasing a net $562.2 million worth of NVIDIA stock following these concerns. These are recent developments, reflecting the swift changes in the AI landscape and the potential implications for tech stocks.
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