Nvidia (NASDAQ:NVDA) stock price settled at a crucial support level on Friday as the post-earnings hangover continued. It has moved into a local correction after falling by 10% from its highest point in May. This retreat may usher in a major comeback as Microsoft prepares to launch its first Windows PC next week.
Microsoft to Launch First Nvidia-Powered Windows PC
Nvidia and Microsoft (NASDAQ:MSFT) stocks will be in the spotlight next week as the latter launches the first Windows PC powered by Nvidia chips.
According to Axios, the two companies will unveil their joint projects at the Computex trade show in Taiwan and Microsoft's Build conference in San Francisco.
These chips will then be rolled out across other PC manufacturers like Dell (NASDAQ:DELL) and HP (NYSE:HPQ).
Nvidia hopes that these new chips will help it compete with those made by top companies like Intel (NASDAQ:INTC) and Advanced Micro Devices (NASDAQ:AMD), which dominate the industry.
In a recent statement, Jensen Huang predicted that its CPU business was targeting a $200 billion market, including China. These CPUs have become popular in the new era where AI agents are seeing robust growth. Just this week, Robinhood (NASDAQ:HOOD) unveiled a new product that lets customers use its AI agents to trade.
NVIDIA aims that the CPU business will complement its GPU business, which dominates the AI industry. Its most recent results showed that its revenue surged 85% in the first quarter to over $81 billion.
The company's guidance is that its revenue will then grow to $91 billion in the current quarter, a figure that may be conservative. For one, the estimate ignored any sales to China as the US has already allowed ten Chinese companies to buy these chips.
There are also signs that the company trades at a bargain price. Data shows that it has a trailing PE ratio of 32 and a forward multiple of 25. Its valuation multiple is slightly higher than that of the S&P 500 Index despite its strong earnings growth. The consensus NVDA stock forecast among analysts is $308, with Tigress placing a target of $425.
Nvidia Stock Price Has Formed a Break-and-Retest Pattern
The daily chart shows that the Nvidia stock price may be preparing a strong comeback. That's because it has retested the important support level at $212, which was the previous all-time high.
It was also the upper side of the cup-and-handle pattern, a common continuation sign. A break-and-retest normally confirms a breakout.
NVDA stock chart | Source: TradingView
This C&H pattern had a depth of about 22%. Extrapolating this percentage from its upper side gives it a target of $260. This view will be confirmed if it moves above the all-time high of $236.
Image: Shutterstock
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