Is Nvidia heading for a massive technical sell-off? Expert analyst’s insights

Nvidias (NASDAQ: NVDA) stock market trend has soured in recent weeks as the semiconductor giant experienced a significant decline throughout July.

After rising some 800% since the artificial intelligence (AI) boom started with the release of ChatGPT in late 2022 and adding some $2.5 trillion to its market capitalization, NVDA stock declined 8.97% in the last 5 days of trading. Nvidia stock price today, on July 29, stands at $113.74.

Additionally, in the last month, NVDA has been trading in the 106.30 – 136.15 range, which is quite wide. It is currently trading near the lows of this range. Volume is considerably higher in the last couple of days.

Market expert warns of massive incoming Nvidia crash

By Monday, July 29, Nvidia shares are in danger of an even greater decline as Javed Mirza, a Raymond James analyst, warned that Nvidia has moved below its 50-day moving average (MA) and is in danger of triggering a mechanical selloff,

According to the expert, such an occurrence would significantly compound the already-present selling pressure on the blue-chip chipmaker and could lead Nvidia shares to plunge another 16.9% from their press time price of $113.74.

Furthermore, the current stock volume dynamics – the high selling pressure and low buying volume – indicate the collapse has already started.

If the warning proves correct, NVDA may soon trade at $94.53, effectively wiping out all gains made since early May. Finally, such a drop could also signal the start of an even greater subsequent fall, given it would take Nvidia shares below their weekly trend line support zone at $96.19.

What is behind Nvidia stocks downturn？

Nvidias recent stock market woes have been linked to several factors, one of the most cited being the concerns about possible further sanctions against China, a major buyer of advanced chips.

Indeed, the broader semiconductor – and, in fact, the broader technology sectors – has been experiencing a sharp downturn in July, and for Nvidia, even the news of a new microchip model designed specifically to be compliant with the restrictions imposed against the Peoples Republic failed to stem the decline.

Significant insider selling pressure has also made the situation worse, with even the companys CEO, Jensen Huang, executing as many as 18 sales worth more than $250 million in July alone.

Is the fragile AI boom making NVDA shares crash and burn？

Finally, the ongoing market dynamics have exacerbated the concerns that the AI boom has generated a massive bubble that could, according to some prominent economists, lead to Nvidia crashing a total of 98%.

Such a notion is further reinforced by NVDA‘s exceptionally high price-to-earnings (P/E) ratio – which stands at 66.16 at press time – which hints that the semiconductor giant’s stock market valuation is both fragile and unsustainable.

Still, despite the dire warnings, there is no guarantee that Nvidia shares are indeed crashing and not experiencing a correction and consolidation phase following its 2024 rise as some analysts, Jim Cramer perhaps being the most notable, remain confident about the AI booms staying power.