Nvidia stock up 2.5% after $1 billion Eli Lilly deal announcement

Highlights

Nvidia and Eli Lilly launched a $1 billion partnership to develop an AI-powered drug discovery lab.
The move expands Nvidia’s AI applications into biotech and pharmaceutical research.
Geopolitical risks in China continue to pose challenges for Nvidia’s chip sales.

The stock remains below its recent high of $212, but comfortably above the December low of around $178, marking $180–185 as a significant short-term support zone. Technically, NVDA is currently trading above its 50-day moving average (~$185), while the 200-day moving average stands far lower, around $140, reflecting the strong longer-term trend.

The Relative Strength Index (RSI) remains in the neutral 50–60 zone, suggesting momentum is neither overbought nor oversold. Short-term traders are watching for a clean break above $190, which could trigger a move back toward resistance at $200–205. Conversely, failure to hold above $185 could open a path to test the $178–180 support band once again. Bollinger Bands have narrowed in recent days, indicating reduced volatility and potential for an imminent breakout in either direction.

Nvidia stock price dynamics (November 2025 - January 2025). Source: TradingView

Nvidia's market capitalization is now approximately $4.6 trillion, with a forward P/E of 46.1, signaling a premium valuation driven by its dominant position in the AI chip market. Options activity shows heavy open interest near the $190–200 strike levels for January expiries, reinforcing the stock’s importance in near-term speculative positioning.

AI drug lab with Eli Lilly boosts growth narrative amid China risk

The recent rally comes in response to Nvidia’s announcement of a $1 billion strategic partnership with pharmaceutical giant Eli Lilly to build an AI-powered drug discovery lab. The lab, based in Silicon Valley, will combine Nvidia’s BioNeMo AI platform and hardware with Lilly’s deep pharmaceutical expertise to accelerate molecular simulation, generative chemistry, and trial optimization. The partnership extends Nvidia’s reach beyond GPUs and data centers into biotech and life sciences, a sector increasingly integrating high-performance computing and AI into R&D.

This is Nvidia's most high-profile foray into real-world scientific applications of AI, beyond autonomous driving and data center solutions. Investors see the deal as part of a broader strategy to capture value across industries leveraging AI, particularly in drug development, where costs and timelines are historically long. The lab is expected to become operational within the next 12–18 months.

However, optimism is tempered by geopolitical and regulatory risks, particularly around Nvidia’s business in China. Export restrictions from the U.S. have already limited Nvidia’s ability to ship its most powerful H100 and A100 chips to Chinese customers. Recent reports suggest that even China-optimized chips such as the H20 and L20 are facing order delays and regulatory scrutiny within the Chinese market. While China accounts for less than 20% of Nvidia's total revenue, it remains a strategically important growth region for AI adoption.

Scenarios and price outlook for Q1 2026

In the bullish scenario, Nvidia holds support at $185 and builds momentum toward a breakout above $190. A weekly close above this level would likely attract institutional flows aiming for a retest of the $200–212 range. Positive earnings guidance later this quarter or accelerating revenue from cloud customers could drive this rally. If enthusiasm around its AI drug discovery initiative translates into tangible pipeline updates or additional partnerships, NVDA could see upward pressure toward its consensus analyst target of $252.

In the bearish scenario, sustained weakness in China orders, macro volatility, or disappointing data center demand could drag Nvidia below $180, targeting the $165–170 support levels. This would coincide with a breakdown of near-term moving averages and spark momentum-based selling.

RBC Capital maintains an Outperform rating on Nvidia with a $240 price target, suggesting a 31% upside. The firm cites Nvidia’s dominant position in AI compute, a $500 billion backlog, and strong demand from hyperscalers, supported by its leadership in inferencing and a deeply integrated software ecosystem.

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