(Bloomberg) — The sharp sell-off that wiped a record $279 billion off Nvidia (NVDA) Corp.’s market value on Tuesday has traders scouring the charts for clues about where the slide might end.

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For Jay Woods, chief global markets strategist at Freedom Capital Markets, $100 per share is a key price to watch — roughly the lowest closing price in the last month. Nvidia shares lost 2 percent in premarket trading, trading at around $106.

“I don’t want to see the stock make a new closing low by surpassing the August low. That would really suggest that things have changed, at least technically,” Woods said. “I think it will get a bid at around $100 and then trade sideways for a while.”

The latest sell-off – shares lost 14% in three trading days – was triggered by the chipmaker’s earnings, which fell short of high expectations. Investors’ nervousness was further heightened by two research reports published on Tuesday that urged caution about companies’ spending on artificial intelligence. More bad news came after the market closed: Bloomberg reported that Nvidia had received subpoenas as part of an antitrust investigation by the US Department of Justice.

The problem for Nvidia stock, according to Michael Kirkbride, portfolio manager at Evercore Wealth Management, is that there isn’t much on the calendar that could serve as a positive catalyst.

“We’re in a bit of a vacuum right now. We’re done with earnings and there’s a lot of economic data coming out this month. There’s a lot of caution to be had,” he said. “When you’re in a trading vacuum, it becomes a go-to-market market and it’s very short-term in nature.”

Nvidia’s plunge, which dragged down global chipmakers and risk assets, comes after a turbulent few months for the AI ​​market darling. Tuesday’s drop was the seventh time in two months that shares fell 6% or more. A measure of 30-day volatility in Nvidia shares also hit its highest level since mid-2022, according to data compiled by Bloomberg.

Investors will also be looking back at the last month to see where Nvidia stock might bottom out. In August, Nvidia slipped into a correction that sent the stock down 27% from its June peak before recovering to within 5% of its record. The reasons for that slump – macroeconomic nervousness combined with renewed concerns about the sustainability of heavy spending on AI – are now being reiterated.

Concerns about the relatively low returns on the tens of billions of dollars spent by Nvidia’s largest customers were at the heart of research reports released Tuesday by JPMorgan Asset Management and BlackRock Investment Institute.

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Michael Cembalest, chairman of market and investment strategy at JPAM, wrote that broader demand from enterprise customers – not just customers like OpenAI training new AI models – would be needed over the next 12 to 18 months to justify the huge spending on the technology.

Meanwhile, Jean Boivin, head of the BlackRock Investment Institute, said patience was required from investors as expanding data centers and increasing processing capacity typically “takes years, not quarters.”

Still, Boivin said investors should continue to maintain an overweight stance on AI stocks as the recent sell-off in the technology sector provides “room to rebuild their holdings.”

Woods of Freedom Capital and Kirkbride of Evercore WM also remain positive about Nvidia in the long term.

Woods sees no reason to panic about this week’s decline, while Kirkbride said there is nothing fundamentally wrong with the company or its earnings report.

“We still hold long-term shares and have not heard anything that would change the story, either about Nvidia or its customers and their spending plans,” Kirkbride said.

“We would be buyers here.”

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While Nvidia is only the third-largest member of the S&P 500 with a 6.1% share of the index, it has become the benchmark’s main driver this year. The chipmaker’s share price has set the trend for the broader market since January, and its plunge this week does not bode well for the index.

Top Tech News

• The US Department of Justice has sent subpoenas to Nvidia and other companies seeking evidence that the chipmaker violated antitrust laws, expanding its investigation into the market-dominant AI processor provider.

• OpenAI CEO Sam Altman’s plans for a massive expansion of the machines and systems needed for artificial intelligence are becoming clearer, starting with a U.S. state initiative that will cost tens of billions of dollars, according to a person familiar with the matter.

• Nvidia has participated in a $100 million funding round for Tokyo-based startup Sakana AI, one of the larger investments the U.S. chipmaker has made to date in Japan’s nascent AI space.

• Swedish mobile operator Telia Co AB plans to cut 3,000 jobs, or about 15 percent of its total workforce, as the company struggles with loss-making operations and faces increasing competition from rivals in its core markets.

• Sony Group Corp. is canceling a major online game that was released just two weeks ago, making it one of the biggest flops in the PlayStation business.

Results due on Wednesday

— With assistance from Henry Ren and Michael Msika.

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