- Nvidia stock is in troubled waters and the US mid-term elections may not be the eye of the current storm after all.
- 1$180.00 Breached supportBreach of $180 support mentioned in the headline
- 2$170.00 SupportStock might test support levels around $170 on weak guidance
- 3$243.37 October high · Key levelMulti-week slide continued from its October high of $243.37
- 4$176.00 Pre-market low · Key levelShares dropped over 5% in pre-market trading to around $176
TradingView Lightweight Charts™ · Yahoo Finance data
Nvidia shares fell sharply in early today, dropping over 5% in pre-market trading to around $176. This continued a multi-week slide from its October high of $243.37, bringing the share price back to April levels.
The downturn followed news that the company’s independent directors had started an investigation into CEO Jensen Huang. This came after Huang disclosed an affair with someone U.S. officials allege passed sensitive information to Beijing.
Have Election Results Been Overplayed?
Markets may have already priced in recent election outcomes. The November 3 election results, with Democrats taking control of both the House and Senate, immediately shifted the outlook for artificial-intelligence infrastructure development.
Investors worried about more oversight for data-center projects, especially after voters rejected new facilities in local ballot measures and elected Democratic governors in states like Texas and Georgia.
Nvidia’s shares fell 9.3% on November 5, wiping over $400 billion off its market value in a single trading session. This was part of a broader market decline. Political shifts like these often trigger short-term sector changes, as capital moves from high-volatility growth stocks, such as semiconductors, to more defensive assets.
Still, while regulatory oversight and export restrictions are certainly factors, hyperscale cloud providers base their capital expenditure decisions mainly on long-term infrastructure commitments that span years, not short-term legislative cycles.
And besides, changes in congressional control don’t take effect until January. Any state-level pauses would also need new legislation to pass.
How Do the Core Fundamentals Look?
Nvidia’s core business appears robust. Second-quarter revenue reached $96.2 billion, a 106% jump from a year ago. Data centers accounted for $89.0 billion of that, reporting a 75.0% gross margin, per Nvidia’s SEC filing.
For this quarter, the company projects revenue around $108 billion, plus or minus 2%. Analysts, though, are forecasting slightly higher, closer to $109 billion in revenue and $2.47 per share in earnings.
The Vera Rubin platform is gaining traction faster than its predecessors. It has already secured purchase orders from major hyperscalers, including Amazon Web Services, which intends to deploy millions more Nvidia GPUs.
Earnings Week Could Bring Clarity or Accelerate Selloff
Nvidia’s upcoming earnings report, due this Tuesday, November 17, might either calm the market or accelerate the current sell-off. The company is scheduled to release its fiscal third-quarter results.
Consensus estimates forecast earnings per share ranging from $2.47 to $2.53, and revenue projected to be somewhere between $108 billion and $111 billion.
A strong earnings report, particularly with encouraging guidance on data-center demand and the Rubin platform’s momentum, could ease market worries and offer the stock a temporary reprieve.
Conversely, if management points to worsening supply chain issues or if hyperscalers indicate they’re pulling back on near-term spending, the stock might test support levels around $170.
Nvidia typically outperforms expectations, so even a merely satisfactory performance, coupled with cautious guidance or ambiguous responses regarding the investigation, could push shares down.
Huang’s affair might cause the company some trouble. Nvidia, however, says it found no evidence that national security or confidential company data was compromised.
The company will likely face many questions about this during its earnings call. It’s tough to put a number on the financial uncertainty these governance issues create.
Nvidia stock fell over 5% in pre-market trading today. This happened after the board announced an investigation into CEO Jensen Huang, alongside ongoing worries about AI data-center regulation following the midterms.
While the Democratic midterm win raised valid concerns about permitting, political gridlock might prevent aggressive new rules from taking hold. Also, there haven’t been any noticeable drop in demand from hyperscalers yet.
Nvidia’s fundamentals are very strong. Last quarter, revenue more than doubled, reaching $96 billion. Data center demand remains very healthy, and management expects roughly 70% growth for the next fiscal year.
What is your outlook on NVIDIA?
Anonymous · no sign-up · results from the last 30 days · not investment advice