Nvidia Stock Wavers. Where a Market Technician Says It Goes Next.
Nvidia stock edged higher early on Thursday, but was on course for a weekly loss after 11 consecutive weeks of gains.
Nvidia shares were up 0.7% at $908.94 in early trading. The stock closed down 2.5% at $902.50 on Wednesday.
“Technical indicators are suggesting trend exhaustion and Nvidia could also be in the process of forming a double top pattern,” wrote Kim Cramer Larsson, a technical analyst at Saxo Bank.
A ‘double top’ is characterized by two consecutive peaks that technical analysts believe can signal a coming reversal of a stock’s momentum. Technical analysts don’t address the fundamentals of a company’s business but analyze stock-price charts for clues about how shares are likely to behave.
Larsson said that if Nvidia closes below $822.79, that would confirm the move and could lead to heavy selling. Meanwhile, a close above $974 would indicate a bullish move and likely open the path for the stock to rise beyond $1,055, according to Larsson.
For those who prefer analysis on fundamentals to charts, Nvidia now trades at a trailing price-to-earnings multiple of 75.6 times and a price-to-sales multiple of 36.9 times, according to FactSet. Both of those are expected to decline quickly: Nvidia is expected to nearly double its earnings per share to $25.08 in its fiscal 2025 year and increase its revenue by around 80% to $109.4 billion.
Growth is expected to slow thereafter.
“If we look at price-to-earnings…then the stock is clearly not expensive…but the problem is the multiple of sales even four years out looks very high to us on Jan 2028 [fiscal year] multiple of 15.5 times,” wrote UBS analyst Andrew Garthwaite in a research note on Thursday.
Among other chip makers, Advanced Micro Devices AMD was up 1.0% in early trading. Intel INTC had gained 1.1%.
Nvidia shares had risen 82% so far this year through to Wednesday’s close. That compares with a 10% rise in the S&P 500 index and a 9.3% gain in the Nasdaq Composite Index
OMP over the same period.