Nvidia Stock in Risk of Bear Market after Reversal from Record Peak

  • NVDA.us
    (${instrument.percentChange}%)

Nvidia Stock Analysis

Nvidia reaps the benefits of its leading work on generative Artificial Intelligence (AI), since its GPUs are the go-to solution for training and inference of large language models. As a result, the company has seen staggering growth in its top and bottom lines over the past several quarters, with its sales up more than 260% in the last one (Q1 FY25) [1]. Executives expect continued growth opportunities and its CEO recently touted a one-year rhythm [2], as the firm accelerates its new AI infrastructure cadence to meet the demands of the industry.

The company briefly surpassed Microsoft as the most valuable company last week and has now overtaken Apple, to become the second largest holding of the Technology SPRD ETF (XLK.us) [3]. The stock reached new record highs last week and gains nearly 140% year-to-date.

However, NVDA.us has entered correction territory due to a sharp pullback over the last few days and is now is risk of a bear market, generally considered as a 20% loss from a recent peak. There are concerns of possible AI-fatigue and there is also the issue of how do you land the ship once the eye-watering revenue growth slows. Executives expects another astounding expansion in excess of 100% y/y in the current quarter, but that would be a substantial slowdown from the last report.

On the other hand, the AI revolution seems unstoppable and Apple's entry into the arena has reinvigorated the optimism. Furthermore, Nvidia is far ahead than its competitors, has constantly defied expectations and sees continued growth ahead. NVDA.us had entered bear territory at the start of the quarter, but that was short-lived, as it quickly rebounded and set new all-time highs. Although an even deeper slide would not be surprising, the correction seems more like a cyclical thing and the firm's AI advances can fuel new records.


Source: www.tradingview.com

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 25 Jun 2024 https://investor.nvidia.com/financial-info/financial-reports/default.aspx

2

Retrieved 25 Jun 2024 https://blogs.nvidia.com/blog/temp-computex-2024-jensen-huang/

3

Retrieved 24 Jul 2024 https://www.ssga.com/us/en/intermediary/etfs/funds/the-technology-select-sector-spdr-fund-xlk

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