Nvidia stock slips 1.2% as overbought signals shadow $43.3 billion earnings estimate
China's share of Nvidia’s total revenue has dropped from 17% to 13% year-over-year
As of May 26, Nvidia stock is trading at $131.29, down 1.2% over the last 24 hours. Despite the daily decline, Nvidia (NASDAQ: NVDA) remains firmly entrenched in a strong bullish trend.
Highlights
• Nvidia is trading at $131.29, showing strong upward momentum but flashing overbought technical signals.
• The company is expected to report $43.3 billion in revenue, though China export restrictions could impact future performance.
• Investors should brace for short-term volatility following the May 28 earnings release.
The stock has rallied more than 50% from its April lows, driven largely by continued investor enthusiasm surrounding artificial intelligence (AI) infrastructure and data center expansion. Technically, the stock is trading above both its 50-day and 200-day simple moving averages, which currently stand at $114.79 and $126.12 respectively. This alignment underscores sustained upside momentum over the medium term.
However, there are warning signs of potential exhaustion. The Relative Strength Index (RSI) is currently at 70.7, a level generally viewed as indicating overbought conditions. Historically, such RSI readings have preceded consolidation or short-term pullbacks. Meanwhile, the MACD histogram remains positive, suggesting underlying bullish sentiment persists. Nonetheless, the risk of a retracement remains elevated unless Nvidia decisively breaks above nearby resistance levels.
NVDA stock price dynamics (March 2025 - May 2025). Source: TradingView.
Key resistance can be seen at $136.35, with further supply expected around the psychological $140 barrier and the recent high of $149.42. On the downside, technical support lies at $126—the 200-day moving average—and further down at $115 and $96.30. A move below $126 could mark the beginning of a short-term corrective phase.
Market context: earnings anticipation and geopolitical challenges
Investors are closely watching Nvidia’s fiscal Q1 2025 earnings report, scheduled for release on May 28. Consensus estimates from Wall Street point to revenue of $43.3 billion, which would represent a staggering 66% year-over-year increase. Earnings per share (EPS) are expected to come in at $0.88, up 44% from the same period last year. The explosive growth is fueled by surging demand for Nvidia’s GPUs in AI model training and inferencing, particularly among cloud service providers and hyperscale data centers.
However, macroeconomic and geopolitical risks remain significant. The ongoing U.S. government restrictions on AI chip exports to China have already started to weigh on Nvidia’s international revenue. In particular, shipments of its H20 chips—a China-specific variant designed to comply with export controls—have been halted. CEO Jensen Huang has acknowledged that these curbs could result in as much as $15 billion in lost revenue, underscoring the strategic importance of the Chinese market.
China's share of Nvidia’s total revenue has dropped from 17% to 13% year-over-year, reflecting both regulatory hurdles and the shifting geopolitical landscape. Still, Nvidia continues to diversify its customer base, including new AI-focused partnerships in the Middle East and elsewhere. These international collaborations may partially offset the revenue drag from the loss of Chinese sales.
NVDA: potential volatility ahead
In the immediate term, Nvidia stock appears poised for volatility. The confluence of overbought technical conditions and a high-stakes earnings announcement creates a binary outcome for short-term price action. A strong earnings beat—particularly one that includes raised forward guidance—could provide the catalyst needed to propel the stock past the $136 and $140 resistance levels, with room to retest $149.42.
Conversely, any earnings miss or cautious commentary from management about U.S.-China trade tensions or slowing hyperscaler demand could lead to a re-rating of the stock. In such a scenario, a pullback toward the 200-day moving average at $126 is plausible, with deeper declines possibly targeting $115.
Despite geopolitical headwinds, sentiment around Nvidia remains bullish, with Oppenheimer reaffirming its "Outperform" rating and a $175 price target, suggesting 33% upside. A major AI partnership with Saudi Arabia has also boosted investor confidence through large-scale GPU purchases.
