Nasdaq
NVDA has been unstoppable this year, setting record after record. But can the Nvidia stock price keep going up in a straight line, or is a correction due?
Shares in Nvidia Corp (NVDA:NASDAQ) closed at $712.41, up $0.87 (+0.12%).
Nvidia, the Delaware-based technology company, has experienced stratospheric price growth over the last 12 months. A confluence of bullish factors has propelled the stock 40% higher this year alone. Moreover, NVDA is almost 4 times higher than its pandemic low of $180.
Demand for Nvidia’s products has exploded as the world shifts to a new technological age. As a result, NVDA is well-placed to benefit from several nascent industries. Increasing Electric vehicle adoption, 5-G internet roll-out, and the growing Internet of Things (IoT) ecosystem all point to a bright future for the stock.
Additionally, the company recently announced a 4-for-1 stock split which could encourage retail buyers excited by the lower Nvidia stock price.
Clearly, the stock is perfectly positioned, but there is no such thing as a free ride, and a better entry price may present itself in due course.
After NVDA announced the stock split, it surged to a new all-time high of $721.58, eclipsing the previous $648.57 record by 11%.
Although the split does nothing to Nvidia’s intrinsic value, the lower price may appeal to a broader investor base.
However, the daily chart shows the Nvidia stock price has over-stretched in the short term. The relative strength Indicator (RSI) reading of 72.0 could be considered to show signs of price euphoria, preceding consolidation or a pullback.
Another potential obstacle could be adjustments in Central Bank monetary policy. Much of the recent growth in the tech sector has been fueled by access to cheap capital.
Following fed Chair Powell’s (hawkish, or less-dovish) press conference yesterday, the market is pricing in 1 rate hike this year, followed by 2 in 2023.
The equity market is yet to react decisively, although it makes sense to assume that tech stocks may cool from current levels.
My conclusion is that whilst NVDA should provide great long-term returns. The best course of action may be to wait for a better entry point.
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