Nvidia was edging up early on Wednesday as the chip maker steadied after a semiconductor-sector selloff. The stock could be establishing a new trading range.
Nvidia was up 0.7% at $201.35 in premarket trading. It closed down 4.1% at $200.03 on Tuesday amid a wider slump in technology stocks.
While investors might be frustrated at Nvidia's relative underperformance against peers -- it is up 7.3% this year so far against a 90% gain for the PHLX Semiconductor Index over the same period -- there is at least evidence that the stock is now established largely above the psychologically important $200 mark.
Since breaking out of its previous trading range in April, Nvidia has only briefly dropped below the $200 level and has generally bounced off it in each dip. The stock is trading at a forward price-to-earnings ratio of 19.34 times according to FactSet, less than the 20.77 times average for the S&P 500.
That valuation could mean investors sensing a bargain will keep it from going much lower. Nvidia is also helping itself by returning 50% of free cash flow to shareholders through dividends and buybacks. For 2026, Nvidia is expected to generate $195.35 billion in free cash flow, so it should be handing back more than $97 billion.
However, shareholders hoping for a breakout might have to be patient. Nvidia needs to show that its next-generation Vera Rubin chips will maintain its dominance in the artificial-intelligence chip market and the hardware only comes onto the market in the second half of year.
Nvidia was a recent Barron's stock pick when shares were trading at around $226.
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