Nvidia (NASDAQ:NVDA) has become an investor favorite over the years. Its high growth, quality products and strong cash flows have drawn in the buyers. That said, NVDA stock hasn’t traded all that well this year. On Tuesday, it’s hitting new 2022 lows — even underperforming the Nasdaq — as it leads the way lower.
That “downside leadership” started a while ago. After a strong rally in March, when Nvidia stock was powering higher alongside Tesla (NASDAQ:TSLA) and Apple (NASDAQ:AAPL), it didn’t hold support on the pullback. The same can be said for Advanced Micro Devices (NASDAQ:AMD).
Now though, NVDA stock may be presenting an opportunity for long-term investors. The stock is now down 45% from the all-time high less than six months ago.
Amid the decline, we have the stock pulling back to the 21-month moving average. This moving average was last support back in March and April 2020. We were looking for a potential test of this area a few weeks ago, wondering if Nvidia stock would fall this far. It’s also roughly where we find the 50% retracement of the long-term range. That’s as we measure from the all-time high down to the 2020 low.
NVDA Stock Chart Analysis
If the selloff continues, we can’t eliminate the potential return to the mid-$170s, followed by a potential test of the 61.8% retracement near $160. The latter is a larger target than the mid-$170s.
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On the upside, NVDA stock needs to reclaim $195, then $208 to $210. Above the latter could open the door to $225-plus, potentially putting the 200-day moving average in play.
The analysts continue to support this name too. Even when they are cutting their price targets, it still represents significant upside in the stock price. Just this week, Credit Suisse even assigned a $400 price target on NVDA stock. If it were to get there, it would represent more than 100% upside from current levels.
Why are they bullish? The same reason that I remain a long-term bull, which is that Nvidia’s products remain in constant demand. Surely, this demand can fluctuate due to the economy, but by and large, demand continues to grow. That’s because Nvidia caters to so many long-term secular growth industries. We’re talking about cloud computing, data centers, artificial intelligence and machine learning, the metaverse, gaming, autonomous driving and electric vehicles, robotics, drones and so on.
These industries will continue to experience strong demand over the long term and thus, NVDA stock is one we want to own for the long term. Down almost 50% from the highs seems like a good place to begin buying for long-term investors.
On the date of publication, Bret Kenwell held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
