After surging for most of the year, Nvidia has fallen around 9 percent from its all-time highs. One technician says the dip has created an optimal buying opportunity.
Todd Gordon, founder of TradingAnalysis.com, said the technology company’s stock is in for a big that could take it into uncharted territory.
“If you look at the corrections over the last couple of years, they’re about 20 to 27 percent,” he said Thursday on CNBC’s “Trading Nation.” “And as the chart shows, we moved right down into technical support about the $180, $181 low.”
The technical support Gordon mentions is actually the bottom of a parallel channel, one whose top line suggests that Nvidia could actually bounce from that support level.
“You won’t reach technical resistance until $250 in the topside of that railroad track,” Gordon said. This means that Nvidia could actually surge another 30 percent from Friday’s levels.
Shares of Nvidia were up fractionally Friday, trading at $192.80.
Nvidia is also looking strong on a fundamental basis, said Michael Bapis, managing director of The Bapis Group at Hightower Advisors. Based on the current demand and developments in the tech sector, chip stocks like Nvidia are yet to see their heyday, he said.
“We’re in the second inning of a technology boom that I think is going to continue for a long time, and as long as semiconductors are needed to make technology work, we’re long the sector,” he said on “Trading Nation.”
Bapis did mention Nvidia in particular as a strong performer whose earnings outlook is positive. “If [chips] can continue to crush their earnings like they have in the past couple quarters, I think I’m long the sector for the foreseeable future,” he added.
Despite the November sell-off, Nvidia is still up over 81 percent this year. Semiconductors as a group are up 37 percent this year.
