Correction followed NVIDIA’s Q2 report provides investors with favorable opportunities

NVIDIA’s share price traded at $170.61 in the early hours of today’s session, extending its downtrend amid a broader sell-off in US equities. Investors are currently favoring safe-haven assets over technology shares, putting pressure on the latter. On top of that, September is typically considered to be a weak month for the stock market.

The initial drop was triggered by NVIDIA’s moderate earnings report for the second quarter (Q2), which disappointed investors. A 56% increase in profits and a forecast of $54 million for the next quarter failed to impress market participants, who had predicted even stronger results. The data center segment was particularly disappointing, with only a 5% quarterly rise. This is the lowest reading since the beginning of the AI boom, suggesting a potential slowdown in the sector.

Investors are also deeply concerned about China’s situation. Despite the agreement with the Trump administration to pay 15% of H20 sales to the Asian country, no legal framework for these payments has been established. This casts doubt on NVIDIA's ability to access one of its largest markets.

However, strong bullish drivers for the AI sector remain intact. OpenAI, for instance, plans to build gigawatt-scale data centers worldwide. Each of these projects might require investments of up to $35 billion, underscoring a robust long-term trend of scaling the AI infrastructure.

From a technical perspective, NVIDIA shares continue to decline on the H4 timeframe. The On-Balance Volume (OBV) indicator is located in negative territory, showing lower trading volumes and higher sales. Meanwhile, the Stochastic Oscillator has entered the overbought zone, signaling the potential for a near-term bullish rebound. While the overall trend is bearish, a technical bounce is possible if buyers seize the initiative.

Given the company's long-term prospects, consider buying the stock during the present downturn. Shares are unlikely to break above their previous highs this month, but their overall potential is higher than their current trading price.

The following trading strategy might be suggested:

Buy at the current price. Take profit: $182. Stop loss: $162.

The forecast remains valid from September 3 to September 10, 2025.