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Nvidia Stock Just Did This for the First Time in 3 Years. Here's What History Says Will Happen Next

Nvidia Stock Just Did This for the First Time in 3 Years. Here's What History Says Will Happen Next

  • 24.03.2025 15:58
  • fool.com
  • Keywords: Stock Market, Investing

Nvidia stock recently experienced a "death cross," a technical indicator suggesting potential short-term decline. While historically this has led to significant drops, long-term investors are advised to focus on the company's strong fundamentals and growth prospects in AI.

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Estimated market influence

Nvidia

Nvidia

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Analyst rating: Strong buy

Nvidia's stock performance and market position in AI are discussed.

Amazon

Amazon

Positivesentiment_satisfied
Analyst rating: Strong buy

Mentioned as an example of a company investing in AI with significant revenue.

Context

Analysis of Nvidia Stock Performance and Market Implications

Key Facts and Data Points

  • Market Cap: $3.0T
  • Today's Change: (3.16%) $3.71
  • Current Price: $121.42
  • 52-week Range: $75.61 - $153.13
  • Volume: 228,452,534
  • Average Volume: 275,733,403
  • Gross Margin: 74.99%
  • Dividend Yield: 0.03%

Technical Analysis and Market Trends

  • Nvidia stock experienced a "death cross" in late March 2025, where its 50-day moving average fell below its 200-day moving average.
  • Historical precedent:
    • Post-death cross in April 2022: Stock dropped ~45% over the next year.
    • Post-death cross in November 2018: Stock declined >40% over nine months.

Business Impact and Strategic Considerations

  • AI Market Growth: Nvidia is a key player in the AI market, expected to grow significantly over the decade.
  • Revenue and Profitability:
    • Q4 2024 revenue: $30.1 billion (YoY +18%).
    • Gross margin: Consistently >70%.

Competitive Dynamics

  • Nvidia faces competition from tech giants like Amazon and Google, but its dominance in AI chips positions it as a leader.

Long-Term Effects and Regulatory Implications

  • Despite short-term technical signals, long-term investors view Nvidia's fundamentals (strong revenue growth, high profitability) as attractive.
  • Potential regulatory risks include antitrust scrutiny, though none have materialized yet.

Sentiment and Valuation

  • Valuation: Trading at 25x forward P/E (down from 50 earlier in the year).
  • Sentiment: Investors may view the death cross as an opportunity to buy at a discounted price.

Conclusion

While short-term technical indicators suggest potential headwinds, Nvidia's strong fundamentals and leadership in AI make it a compelling long-term investment.