All eyes on NVIDIA this week?

AI nirvana?

Amplifying the hype on August 23, Wedbush analyst Dan Ives said it could be “the most important week for the stock market in years” because “for every $1 spent on an NVIDIA GPU chip there is a $8-$10 multiplier across the sector.” He added:

“The stage is set for tech stocks to move higher into year-end and 2025… as the Fed gets in position to start its rate cutting cycle, macro soft landing remains the path, and tech spending on AI remains a generational spending cycle just starting to hit the shores of the tech sector.”

The short-term setup

Since the end of the early-August ‘flash crash,’ NVIDIA has been a trend trader’s dream. The blue line shows how the stock found consistent support near its 10-hour moving average for roughly a week and a half. After a breakdown on August 19, the 20-hour MA (the yellow line) helped reverse the momentum.

Despite the recent drawdown, NVIDIA ended last week above its 10 and 20-hour MAs and has price support near $127 (the horizontal white line at the top). As a result, the trio is a solid anchor.

What if NVIDIA disappoints?

The middle and lower horizontal white lines highlight how further price support is near $125 and $123. Now, NVIDIA is highly volatile, and these levels may not hold if the earnings print is bad. However, they should be solid leading up to the event, and you can use the after-hours market to exit at your desired stop-loss level.

Potential trades

With rival AMD reporting resilient earnings recently, it could be a sign that demand for AI chips remains robust. Therefore, if NVIDIA delivers good but not great results, it should be enough to calm investors’ fears of recession.

Consequently, remaining long above $127 could be wise, as you have three layers of support (adding the 10 and 20-hour MAs). For more risk-averse traders, it may be prudent to wait until after the earnings release to gain a clearer sense of whether the uptrend remains intact.