NVDA short term : Boom or Bust?
For The Record.
Artificial intelligence (AI) chipmaker Nvidia remained in the spotlight Mon, 24 Jun 2024 as its shares continued falling from a record high reached last Thu, 20 Jun 2024.
On Monday, It fell by -6.7% to close at $118.11 per share.
Nvidia - Price movement after 10 June 2024, Stock Split
Taking last week’s dip into considerations, Nvidia has fallen by -16% from its all-time intraday high of $140.76 set last Thursday. (see above)
There have not been any major Nvidia-related news stories lately to “affect” its stock prices.
Therefore, most plausible reason is, investors are using a rare moment of broad market sluggishness for profit-taking following the stock’s meteoric rise in 2024 so far, amid the AI boom.
Technical Considerations.
Since last April 2023, Nvidia found support around its 50-day moving average.
It has been tracking sharply higher since and investors viewing any dips as buying opportunities.
However, last Thursday’s intraday reversal from its all-time high (ATH) created: (see above)
- A bearish engulfing pattern,
- A candlestick formation that warns of a potential downside reversal, especially after a significant price advance.
- If Nvidia’s price continues to retrace, amid a shift in sentiment, then keep an eye on and around $119 and $110,
- Both are possible areas where support (could be found), from minor pullbacks over the past three weeks.
- Failure to hold could see the shares revisit a horizontal line near $97 that connects several prior record highs.
Catalysts - Make or Break.
Below are some factors (sourced from media) that could lift up or drag down the stocks in the coming days.
(1) Insider selling.
A posting by unusual_whale (18 Jun 2024) on “X” (formerly Twitter) revealed that Nvidia’s CEO Mr Jensen Huang has sold 312 million worth of shares as per pre-planned 10b5-1 schedule.
Two days later, Nvidia stock began its consolidation. Coincidence?
(2) Middle East venture.
On 19 Jun 2024, on the sidelines of the TM Forum in Copenhagen, Nvidia has signed a deal to deploy its AI technology at data centres, owned by Qatari telecoms group Ooredoo in 5 Middle Eastern countries - Qatar, Algeria, Tunisia, Oman, Kuwait and the Maldives. (see above)
This makes Ooredoo, the first company in the region able to give clients of its data centers direct access to Nvidia's AI and graphics processing technology.
It should be viewed as a “+” for Nvidia, yet I cannot shake off the feeling that further down the road, the US government may tighten the restrictions to stave off the export.
(3) Artificial Intelligence (AI) Fatigue.
It is plausible that investors begin suffering from AI fatigue or become more broadly concerned about index concentration.
Afterall, Nvidia first “boomed” in early May 2023 when stock price spiked for the first time.
It then occurred again in early January 2024, rising consistently and then in May 2024.
Given the clout it wielded, any hiccups Nvidia exhibits will have a ripple effect on the Composite indexes and this does not bode well for both institutions and retail investors, looking to the indexes for directions.
(4) PCE Inflation Report jitters.
If you have been around the blocks a few times, you will realized that US market always be nervous on the run up to inflation data release, be it (a) Consumer Price Index (CPI) at the beginning of the month and (b) Personal Consumption Expenditure (PCE) towards month end.
With May 2024 PCE data due out on Friday, market is nervous that it won’t dip like May CPI.
Before I forget, last Friday was also quadruple witching weekend.
(5) Growth of Future Demand.
Later this year, Nvidia will start shipping its next-generation AI chips, called Blackwell.
Some analysts expect this could kick off another up cycle of significant growth for the chipmaker and its partners.
As mentioned previously, the basic infrastructure (foundation) has been laid.
Now it is about maintenance and build upon the foundation making it even more efficient.
At $118 on Monday, curious to see if the $110 and $97 support level will be tested.
Do you think Nvidia’s fall will halt on Friday after PCE data is out ?
Do you think Nvidia will recover its lost grounds by next week?
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