Nvidia, a prominent player in the semiconductor industry renowned for its innovative graphics processing units (GPUs) and artificial intelligence (AI) technologies, experienced a notable uptick in early trading on Thursday. However, this upward movement was overshadowed by the anticipation of a weekly loss, marking a significant deviation from its remarkable 11-week winning streak. Despite opening at $908.94, reflecting a modest 0.7% increase, the stock’s previous day’s close at $902.50 indicated a slight downturn.
Technical analysis, as presented by Kim Cramer Larsson, a seasoned analyst at Saxo Bank, shed light on potential signs of ‘trend exhaustion’ and the emergence of a ‘double top pattern’ in Nvidia’s stock. This chart pattern, known as a ‘double top,’ typically comprises two consecutive peaks and is often interpreted as a signal of an imminent reversal in momentum by technical analysts. Larsson’s assessment suggests that should Nvidia’s stock close below the critical support level of $822.79, it could confirm the formation of this pattern, potentially triggering substantial selling pressure. Conversely, a bullish scenario could unfold if the stock manages to close above $974, potentially setting the stage for further upward movement towards the $1,055 mark.
For investors inclined towards fundamental analysis, Nvidia’s current valuation metrics, as provided by FactSet data, offer valuable insights. The stock currently trades at a trailing price-to-earnings (P/E) multiple of 75.6 times and a price-to-sales (P/S) multiple of 36.9 times. However, these multiples are expected to undergo rapid decline, buoyed by Nvidia’s projected robust financial performance. Analysts anticipate a near doubling of Nvidia’s earnings per share to $25.08 by fiscal year 2025, coupled with a substantial 80% surge in revenue to $109.4 billion. Nevertheless, growth expectations are anticipated to taper off beyond this period, raising concerns among some analysts.
Andrew Garthwaite, an analyst at UBS, voiced apprehensions regarding Nvidia’s lofty price-to-sales multiple, particularly casting a wary eye towards the fiscal year 2028 projections, where the multiple stands at 15.5 times.
In the broader semiconductor landscape, other industry players such as Advanced Micro Devices (AMD) and Intel witnessed modest gains in early trading, with AMD up by 1.0% and Intel by 1.1%.
Despite the nuanced performance of Nvidia’s stock, its year-to-date surge of 82% as of Wednesday’s close stands as a testament to its robust growth trajectory, vastly outpacing the gains seen in broader market indices like the S&P 500 (10% increase) and the Nasdaq Composite Index (9.3% increase) over the same period.