Nvidia stock drops below $114 as AI demand faces geopolitical risks
The upcoming earnings report on May 28 will be closely watched
As of May 7, Nvidia stock is trading at $113.54, reflecting a decline of 0.3% in the last 24 hours. The stock is currently navigating a consolidation phase within a falling wedge pattern—a technical formation that often precedes bullish breakouts.
This setup has drawn the attention of investors, who are closely watching the stock’s price action around key levels. Nvidia is trading above both its 50-day simple moving average (SMA) at $109.31 and the 200-day SMA at $107.14. This positive setup suggests a continuation of the bullish trend. Key support levels for the stock are identified at $96 and $87, while resistance levels are observed at $115 and $130.
The Relative Strength Index (RSI) stands at 65.5, nearing the overbought zone of 70, indicating that a short-term pullback may be possible before further upward movement. Additionally, the Moving Average Convergence Divergence (MACD) indicator is currently in positive territory at 1.58, which is another bullish signal. These technical indicators align with the expectation of a potential breakout, but caution is warranted due to the elevated RSI.
NVDA stock price dynamics (March 2025 - May 2025). Source: TradingView.
If Nvidia breaks above the $115 resistance, the next target would be the $130 level, a strong psychological barrier. Moreover, the intraday price action shows a high of $114.69 and a low of $110.87, suggesting that volatility remains a factor. The stock has an intraday volume of 158,525,621 shares, reflecting strong market interest.
AI demand supports growth, but geopolitical risks persist
Nvidia's growth is primarily driven by the booming demand for artificial intelligence (AI) and data center solutions. Major tech firms such as Microsoft, Meta Platforms, and Amazon continue to invest heavily in AI infrastructure, which has directly benefited Nvidia due to its leadership in high-performance GPUs.
However, the company faces some challenges. Geopolitical tensions between the United States and China have raised concerns about potential tariffs on semiconductor exports, which could impact Nvidia’s revenue. Moreover, the competitive landscape is intensifying, with other chipmakers, including AMD and Intel, vying for market share in the AI and data center sectors.
Additionally, Nvidia’s ongoing investment in AI-driven solutions for autonomous vehicles and gaming enhances its growth potential. The upcoming earnings report on May 28 will be closely watched, with analysts expecting earnings per share of $0.89 and revenue of $43.12 billion. Positive results could serve as a catalyst for a breakout above the key resistance level.
Potential breakout contingent on earnings and macro factors
Looking ahead, Nvidia's stock has the potential for a bullish breakout if it can decisively overcome the $115 resistance level. Such a breakout could open the path toward the next target at $130, which aligns with previous highs and would represent a significant gain for investors.
Conversely, a failure to breach the $115 resistance may result in a pullback toward the support levels at $96 or $87. Given the stock's elevated RSI, some consolidation cannot be ruled out in the short term. Furthermore, the performance of Nvidia’s AI and data center segments will be key determinants of its price trajectory.
Investor sentiment around Nvidia is strong due to high demand for AI and data center solutions, with Bank of America reiterating its buy rating and a $190 target. The bank highlighted Nvidia's 90% market share in AI training and expanding role in AI inference as key advantages.
