Investing.com – NVIDIA Corporation (NASDAQ:) stock fell sharply for the third consecutive session on Monday, falling 1.68% at the close, after -2.25% last Friday, and -1.41% last Thursday.
However, the technology index for its part marked a new historic record at 20,173.89 points yesterday.
The divergence between the Nasdaq and Nvidia is even more striking since the start of the month, as NVDA loses 4.5%, while the Nasdaq gains 4.97%. However, no particular bad news seems to justify this sudden underperformance of Nvidia stock.
Nvidia’s graphics profile is rapidly deteriorating
From a charting point of view, we note that Nvidia stock began testing the key support of $132 yesterday.
Furthermore, the stock broke last Friday below a downward trend line that had been stretching since August.
If the decline continues, the 100-day MA at $127.91 will be the next potential support, before the $120 threshold, then the 200-day MA at $115.
NVDA stock is overvalued according to valuation models
Regarding valuation, it should be noted that most models consider the stock to be overvalued. Indeed, the InvestingPro Fair Value, which summarizes 14 recognized models, stands at $119.93, or more than 9% below last night’s closing price.
Note, however, that analysts are more optimistic, posting on average a target of $172.38 for Nvidia, which translates into an upside potential of 30.5%.
Should we be worried about a decline in Nvidia?
While Nvidia has often been seen as a driver of the stock’s bull market over the past two years, and a barometer of the AI rally, seeing the stock underperform is a red flag that shouldn’t be ignored.
This is all the more true as this decline comes at a time when other technological stocks are making strong progress, bringing the Nasdaq to new historical records, and when more “classic” stocks are struggling, as demonstrated by the 8th consecutive session of decline on Monday.
