NVIDIA selloff ahead of correction

Three years have passed since OpenAI revolutionized the market by launching its blockbuster artificial intelligence (AI) model ChatGPT. However, traders are becoming increasingly skeptical about these high-cost technologies, as evidenced by a recent selloff in NVIDIA Corp. and a sharp decline in Oracle Corp. shares. Heading into 2026, the debate is heating up over whether to limit investment in AI under the threat of a bubble burst or to ramp up efforts for maximum benefit.

Trader concerns stem from the enormous cost of AI development and uncertainty about consumer willingness to pay for these services. The stock market’s fate depends on how these questions are answered.

In September, NVIDIA pledged to invest up to $100 billion in the industry, sparking worries about cyclical financing in the sector. Leveraging puts pressure on the company because bondholders must receive regular cash payments, unlike equity investors, who mainly profit from rising share prices.

NVIDIA's market capitalization is likely overvalued, so a technical correction is due. The four-hour chart shows a head and shoulders reversal pattern forming with a neckline at $167.0. A break below this level could send the stock down to $150.0.

The ultimate recommendation is to sell NVIDIA following a break below $167.0. Take profits at $150.0. A Stop Loss order could be set at $179.0.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.