Buy NVDA during sell-off amid short-term risks

Shares of NVIDIA (NVDA) partially recovered on Tuesday after a decline that began on February 21. During that time, the stock has fallen 14.16%. The market closed at 115.65 on Tuesday.

The main reason for the stock sell-off was an overestimation of the risks associated with the consequences of U.S. President Donald Trump's protectionist policies. Many experts believe that the current policy could have a negative impact on the country's economy, which led to pessimistic sentiment in the stock market. Nvidia was one of the companies most visibly affected by the lowered sentiment.

Even strong financial results could not stop the decline. The company beat analyst expectations for fourth-quarter earnings and revenue, and provided an optimistic sales forecast for the current quarter thanks to its new line of Blackwell chips, which are actively used to train artificial intelligence models. However, this positive news was not enough to offset market pressures.

The situation is exacerbated by the fact that while semiconductor products are not directly affected by the new tariffs, Nvidia is facing the indirect effects of trade restrictions. This is particularly noticeable in countries like Mexico and China, where rising product costs are dampening demand. In addition, a recent Wall Street Journal report about Chinese buyers circumventing U.S. export controls on Nvidia chips has heightened investor concerns. This has the potential to lead to tighter U.S. trade restrictions, which would create additional risks for the company.

However, despite the current negative momentum, the long-term outlook remains moderately optimistic. According to analyst firm Bernstein, Nvidia's sales in China have reached a record $17 billion since the beginning of fiscal year 2025, but they represent only 13% of the company's total revenue. This low reliance on the Chinese market could mitigate the impact of a potential tightening of export controls.

Technical analysis confirms the dominance of the downward trend. The MACD indicator shows a decline: the signal line is moving below the main line, and the growth of the histogram bars indicates increasing pressure from the sellers. The RSI is in the neutral zone, but is gradually approaching the oversold level, which increases the probability of a correction. At the same time, the Chaikin oscillator shows some increase in the volume of purchases, but sellers still dominate the market.

Current recommendation:

Buy at the current price, taking into account the long-term potential of the company, provided that there are no serious trading restrictions. Take profit - 140.00. Stop loss - 105.00.