Nvidia stock drops 2.9% as post-earnings rally pauses

Nvidia (NASDAQ: NVDA) has recently pulled back from its local highs, closing at $135.13 on June 2, down 2.9% for the day. 

Despite this short-term dip, the overall technical structure remains firmly bullish. 

Highlights

• Nvidia pulled back 2.9% to $135 after a strong multi-week rally driven by AI momentum and robust earnings. 

• Technical indicators remain bullish, with support at $130 and upside targets at $150 and $160. 

• Strategic deals and high investor interest continue to support the stock’s medium-term outlook.

Over the past month, NVDA has surged more than 50% from its April lows, confirming a breakout from a bullish flag pattern. This breakout suggests strong continuation potential, supported by robust volume and consistent institutional buying. Momentum indicators such as the Relative Strength Index (RSI) remain elevated near 66, suggesting strong but not yet overbought conditions. The MACD is also in positive territory with a widening histogram, reflecting ongoing bullish momentum.

A key technical milestone has been the recent formation of a golden cross, where the 50-day moving average has crossed above the 200-day moving average. This is traditionally seen as a strong bullish indicator, pointing to sustained upward momentum. Nvidia's 50-day moving average now sits at approximately $121, while the 200-day is near $107, both trending upward.

TradingView.

Resistance levels to monitor in the near term include $143, corresponding to February’s local high, and $150, a psychologically significant round number that previously acted as a ceiling in late 2024. A break above $150 could trigger a further rally toward $160, based on the measured move from the flag breakout. Conversely, support is seen at $130, which aligns with recent consolidation, with stronger support levels at $121 and $115 — the latter being just above the 50-day moving average.

AI dominance and macro environment bolster Nvidia’s growth

Nvidia's performance is being driven not just by technical factors but by underlying fundamentals and macro tailwinds. The company recently reported quarterly revenues of $44.06 billion, up 69% year-over-year, surpassing Wall Street estimates despite absorbing a $4.5 billion charge linked to export restrictions on its H20 chip in China. This exceptional growth underscores Nvidia’s strategic positioning in the AI revolution.

The market narrative around Nvidia is heavily centered on its dominance in GPU and data center markets, which are critical to AI model training and inference workloads. Adding fuel to the bullish sentiment is the company's recent multi-year agreement with a Saudi Arabian AI firm, which will see hundreds of thousands of Nvidia’s next-generation GPUs deployed across Middle Eastern data centers. This deal, which was announced during former President Trump’s Middle East tour, is seen as a long-term growth catalyst and a geopolitical hedge against restrictions in China.

Nvidia's technical strength is mirrored in its quantitative ratings. Its IBD SmartSelect Composite Rating is at 97, meaning it outperforms 97% of all listed stocks across key metrics such as earnings strength, price performance, and institutional ownership. Its Earnings Per Share (EPS) Rating is an exceptional 99, reflecting stellar profit growth.

Breakout toward $150–$160 likely, $130 is key support

Looking forward, the short-term price trajectory for Nvidia remains upward, assuming broader market conditions remain stable. A clear break above the $143 resistance level would open the path to $150. Should that level be breached with volume confirmation, Nvidia is likely to extend gains toward the $160 level, supported by the flag pattern's technical target and strong momentum from institutional buying.

However, traders should remain cautious of any breakdown below $130, which would suggest a short-term consolidation or correction. A move toward $121–$115 would still be within a healthy technical range and could offer new buying opportunities.

CEO Jensen Huang outlined AI reasoning, AI agents, and sovereign AI infrastructure as Nvidia’s key growth drivers. Upcoming deployments of Blackwell-based AI servers in late 2025 are expected to spark a new wave of capital spending from hyperscalers and enterprises.