# Nvidia is now cheaper than it was before the AI boom while Apple just locked in $30B for chips — time to buy the dip

_AI-generated trading idea · LONG · AVGO, NVDA, SMH_

> Canonical page: https://commonquant.ai/research/for-you/nvidia-is-now-cheaper-than-it-was-before-the-ai-boom-while-a--ea016a6a-9b4a-4598-881a-107afad3a9b8

Nvidia has lost roughly $1 trillion in value over a short period, making its stock price relative to its earnings the cheapest it has been since before the AI boom started. Meanwhile, Apple just committed $30 billion to Broadcom for chips, proving that massive demand for silicon remains incredibly strong despite the recent fear in the tech sector.

## Idea

Bloomberg highlights that Nvidia's recent $1 trillion slide has pushed its valuation back to pre-AI boom levels, suggesting the selling may be overdone. Separately, news of Apple's massive $30 billion deal with Broadcom demonstrates that underlying demand for high-end chips is still accelerating, not slowing down. Furthermore, CNBC notes that smart traders are already betting on a snap-back rally for Nvidia as the rest of the chip sector takes a beating. The combination of extreme fear pricing on Nvidia and massive confirmed spending in the sector creates a compelling bounce-back opportunity.

## Advanced Analysis

### Verdict: A Real Dip-Playing Strategy — But Every Entry Gate Is Far From Firing

The idea earns a wait, not a buy: the ruleset is well-defined and has a genuine scoreboard, but every entry condition is flagged far from trigger right now. NVDA closed at $218.81 with its 14-day RSI at 44.6 — about 9.6 points above the 35 threshold — and its 1-day change at -2.4% against a required +1% pop; AVGO's mirror readings are similarly distant. The strongest point for the idea is the completed 60-month daily backtest: 19 trades, a 63.2% win rate, roughly 135% cumulative return, and an 18.4% maximum drawdown — though exits were filled on daily bars, so fills are coarse. The strongest point against is the most recent ownership filing (quarter ended June 30, 2026): net open-market insider selling of about $565 million at NVDA and $283 million at AVGO, plus a CNBC-reported crowd already positioned for the same bounce (July 7, 2026). The demand-side thesis is real — NVDA's fiscal 2026 revenue grew 65.5% to $215.9B with $96.7B in free cash flow, and the Apple-Broadcom deal cited in the thesis is concrete — but fundamentals don't shorten the wait. The verdict flips to actionable only when the RSI condition and the same-day confirmation pop actually align.

#### Conviction score breakdown

Composite score computed by the server from the applicable evidence-tier dimensions.

| Measure | Value |
| --- | ---: |
| Thesis support | 72/100 |
| Trade readiness | 25/100 |
| Risk quality | 60/100 |
| Backtest evidence | 70/100 |
| Fundamentals trend | 78/100 |
| Score | 61/100 |
| Composite Score | 61/100 |
| Evidence Tier | backtested |

#### Decision scenarios

Bull, base, and bear cases synthesized from the cited evidence tier. Likelihoods are rounded evidence-weighted judgments, not statistically calibrated forecasts.

| Measure | Value |
| --- | ---: |
| Evidence Tier | backtested |

### Trade now: two checks stand between you and this dip-buy

This is a patience trade today. NVDA closed at $218.81 with its 14-day RSI at 44.6 — the entry requires an RSI at or below 35, so the oscillator is about 9.6 points too high. The second condition is a same-day pop: the 1-day rate of change must be above 1%, but it currently prints -2.4%. AVGO's mirror conditions are also far from firing, with RSI at 43.5 and a 1-day change of -1.0%. Nothing is close: both entry gates are flagged far from trigger on both tickers.

Once an entry does fire, the exits are fully specified. Each position carries a hard stop at a 2.5% loss and a take-profit at a 4.9% gain, an effective reward-to-risk of roughly 2-to-1, plus a price-based stop below the 78.6% retracement level and a target at the nearest resistance level — for NVDA that nearest overhead resistance sits at $220.54. Position sizing is capped at 25% of the book per name under a fixed-risk scheme.

The evidence behind the setup is a completed backtest: over five years of daily bars on NVDA the rules produced 19 trades, a 63.2% win rate, a 135% cumulative return, and an 18.4% maximum drawdown. Note that exits in that test were filled on daily bars rather than intraday, so stop and target fills are approximate. What "wait" means concretely: no position until the RSI condition and the confirmation-day up-move align — chasing before that is not the strategy.

#### AVGO price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | AVGO |
| Timeframe | 1d |

#### NVDA price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | NVDA |
| Timeframe | 1d |

#### SMH price and trigger map

Uses the idea timeframe and keeps price levels on the price axis.

| Measure | Value |
| --- | ---: |
| Ticker | SMH |
| Timeframe | 1d |

### Buying the Panic Has Been Paid — Here Is the Test

The completed backtest gives the thesis a real scoreboard rather than just a narrative. Over a 60-month daily window, the rules produced 19 completed trades with a 63.2% win rate and a total return of about 135%, while the 24-month window alone returned roughly 29.3% on 7 trades at a 71.4% win rate. Shorter recent windows thin out — the 12-month test turned only about 1.3% on 2 trades — so much of the result was earned through the 2023–2026 cycle of AI-driven drawdowns and recoveries, which is precisely the regime the idea expects to repeat.

#### AVGO Operating margin

Operating margin trend from CommonQuant fundamentals/XBRL data; +771.2% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2016-10-30 | \-0.030891238670694866% |
| 2017-01-29 | \0.12225175163082871% |
| 2017-04-30 | \0.11766118381558412% |
| 2017-04-30 | \0.11312649164677804% |
| 2017-07-30 | \0.12726704190118823% |
| 2017-07-30 | \0.14519381581895585% |
| 2017-10-29 | \0.13444091630755273% |
| 2018-02-04 | \0.1770227144734372% |
| 2018-05-06 | \0.20733004545014988% |
| Latest Value | \0.20733004545014988% |
| Change Pct | \771.1613207237126% |
| Ticker | AVGO |
| Timeframe | reported periods |

#### AVGO Return on equity

Return on equity trend from CommonQuant fundamentals/XBRL data; +678.5% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2016-10-30 | \-0.07949350886816603% |
| 2017-10-29 | \0.08341138772491989% |
| 2018-02-04 | \0.21422922182868545% |
| 2018-05-06 | \0.3102254654317523% |
| 2018-05-06 | \0.11594474069916112% |
| 2018-08-05 | \0.4059449220457526% |
| 2018-08-05 | \0.04356695322745155% |
| 2018-11-04 | \0.459879206212252% |
| Latest Value | \0.459879206212252% |
| Change Pct | \678.5116454916172% |
| Ticker | AVGO |
| Timeframe | reported periods |

#### AVGO sector percentile check

Ranks AVGO against 791 companies in its sector using CommonQuant fundamentals.

| Measure | Value |
| --- | ---: |
| Free cash flow | \99.36788874841972th percentile |
| Operating margin | \98.00936768149884th percentile |
| Return on equity | \87.5366568914956th percentile |
| Revenue growth (YoY) | \69.67005076142132th percentile |
| Ticker | AVGO |
| Sector | Information Technology |
| Peer Count | 791 |

### The Crowd Is Already Buying This Dip

The bear case starts with the crowd itself: CNBC reported on July 7, 2026 that traders were already positioned for a big Nvidia rally while the chip sector sold off. When a bounce thesis is this consensus, the marginal buyer may already be in — and the same fear metric that creates entries (Nvidia's 14-day RSI falling below 35) can simply re-test and cut you out repeatedly in a grinding downtrend.

#### Backtested stress-test read

Shows the backtested sample behind the bear-case risk discussion.

| Measure | Value |
| --- | ---: |
| Return | \135.1147061845369% |
| Win rate | \63.1578947368421% |
| Max drawdown | \18.36809215803863% |
| Trades | 19 count |
| Timeframe | 60 months |

#### NVDA Free cash flow

Free cash flow trend from CommonQuant fundamentals/XBRL data; -208.0% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2010-01-31 | $410206000 |
| 2011-01-30 | $577907000 |
| 2011-05-01 | $141005000 |
| 2011-07-31 | $199703000 |
| 2011-07-31 | $58698000 |
| 2011-10-30 | $405085000 |
| 2011-10-30 | $205382000 |
| 2012-01-29 | $770421000 |
| 2012-04-29 | $-38131000 |
| 2012-04-29 | $-443216000 |
| Latest Value | $-443216000 |
| Change Pct | $-208.04717629678748 |
| Ticker | NVDA |
| Timeframe | reported periods |

#### NVDA Return on equity

Return on equity trend from CommonQuant fundamentals/XBRL data; -84.2% from first to latest point.

| Measure | Value |
| --- | ---: |
| 2008-01-27 | \0.3046874761260119% |
| 2009-01-25 | \-0.012545037859363282% |
| 2009-07-26 | \-0.13644156448603703% |
| 2009-07-26 | \-0.04685484484577574% |
| 2009-10-25 | \-0.08213406721721711% |
| 2009-10-25 | \0.0443866341260132% |
| 2010-01-31 | \-0.02550972932003572% |
| 2010-01-31 | \0.0491816564983453% |
| 2010-05-02 | \0.048098942720959784% |
| Latest Value | \0.048098942720959784% |
| Change Pct | \-84.2136791007888% |
| Ticker | NVDA |
| Timeframe | reported periods |

### Company context

\#\#\# AVGO \*\*Ownership and insiders.\*\* For…

### Scores

- **Conviction score breakdown:** 61
- **Thesis support:** 72
- **Trade readiness:** 25
- **Risk quality:** 60
- **Backtest evidence:** 70
- **Fundamentals trend:** 78

### Watch items

- **NVDA — RSI (14)**
- **NVDA — 1-day rate of change**
- **AVGO — RSI (14)**
- **AVGO — 1-day rate of change**
- **NVDA — Price at nearest support**
- **NVDA — Insider net open-market activity**
- **AVGO — Insider net open-market activity**

## Key details

- Symbols: AVGO, NVDA, SMH
- Timeframes: D1
- Tags: \#chips, \#value, \#AI, \#stock

## Community

- Upvotes: 21
- Views: 242
- Copies: 0
- Cosigns: 0

## News sources

- [Apple announces chip deal with Broadcom worth more than $30 billion](https://finance.yahoo.com/technology/article/apple-announces-chip-deal-with-broadcom-worth-more-than-30-billion-100000097.html) — Yahoo Finance
- [As chip sector takes it on the chin, traders bet on a big Nvidia rally](https://www.cnbc.com/2026/07/07/as-chip-sector-takes-it-on-the-chin-traders-bet-on-a-big-nvidia-rally-.html) — CNBC
- [Nvidia's $1 Trillion Slide Sends Valuation to Pre-AI Boom Levels](https://www.bloomberg.com/news/articles/2026-07-08/nvidia-s-1-trillion-slide-sends-valuation-to-pre-ai-boom-levels) — Bloomberg

## Related

- [AVGO trade ideas](https://commonquant.ai/markets/avgo)
- [NVDA trade ideas](https://commonquant.ai/markets/nvda)
- [SMH trade ideas](https://commonquant.ai/markets/smh)
- [Latest market news](https://commonquant.ai/news)

## About CommonQuant Research

Ideas and Advanced Analysis are generated with fresh, LLM-selected news headlines and grounded in SEC XBRL fundamentals and peer percentiles. Strategies built from these ideas are automatically backtested (over a timeframe-dependent historical window with walk-forward tuning) and stress-tested before they can go live, then monitored against the news hourly while they run.