Nvidia Rout Has Traders Watching $100-Share Level Amid ‘Vacuum’

The sharp selloff that wiped a record $279 billion off Nvidia Corp.’s market value on Tuesday has traders scouring charts for clues as to where the pain might end.

For Jay Woods, chief global strategist at Freedom Capital Markets, $100 per share is a key level to watch — around the price of last month’s lowest close. Nvidia shares slipped 2% premarket to trade at about $106.

“I don’t want to see the stock make a new closing low by taking out the August low. That would really suggest that things have changed, at least in terms of the technicals,” Woods said. “I think it will catch a bid around $100, then trade sideways for a bit.”

The latest selloff — with shares down 14% over three trading sessions — was triggered by the chipmaker’s earnings, which failed to live up to lofty expectations. Investor jitters were compounded by two research reports published on Tuesday which sounded notes of caution on companies’ spending on artificial intelligence. More bad news came after the market close, with Bloomberg reporting that Nvidia has been sent subpoenas as part of a US Justice Department antitrust probe.

The problem for Nvidia shares is that there’s not much on the calendar that could provide a positive catalyst, according to Michael Kirkbride, portfolio manager at Evercore Wealth Management.

“We’re in a bit of a void right now. We’re through with earnings, and there is a lot of economic data coming up this month. There’s a lot of caution ahead of that,” he said. “When you’re in a trading vacuum, it becomes a shoot-first market that is very short-term in nature.”

Nvidia’s slump, which pulled global chipmakers and risk assets lower, comes after a tumultuous few months for the AI market darling. Tuesday’s decline was the seventh time in two months that the shares have dropped 6% or more. A measure of 30-day volatility in Nvidia shares has also hit the highest since mid-2022, according to data compiled by Bloomberg.

Investors will also be looking back to last month for a sense of where Nvidia shares may bottom out. In August, Nvidia sank into a correction that ultimately saw the stock fall 27% from a June peak before rallying back to within 5% of a record. The reasons for that slump — macroeconomic jitters combined with renewed worries about the staying power of big spending on AI — are being echoed now.