Nvidia Stock Drops 2%, Faces Potential 18% Decline Ahead of Earnings

Nvidia's stock has been on a three-day losing streak ahead of its upcoming earnings release. On August 19, the shares rebounded slightly but still dropped over 2% due to soaring U.S. Treasury yields that hit high-valuation tech stocks.

The market is closely watching the mass production and delivery schedule of Nvidia's new Blackwell architecture chips. Some institutions are concerned about initial supply chain yields and assembly complexity, which could weigh on gross margins in the short term.

Additionally, there are concerns that major customers such as Microsoft, Meta, and Google may have overexpanded their AI server deployment, leading to a temporary digestion period for Nvidia's procurement. Some short-term capital and quantitative funds (CTAs) have chosen to trim positions ahead of the report to avoid the risk of a 'sell the news' event even if earnings are positive.

Nvidia's technical perspective shows that its recent attempt to hit a new all-time high ended in failure, forming a descending channel, a classic bearish pattern. The stock may continue downward to search for support ahead of its earnings release on August 26, with the first support level at $200 and the second line of defense at $180.