Nvidia has been ripping higher over the past month, easily running to new all-time highs. How far can it go from here?
Nvidia shares have finally been giving bulls something to cheer about as the stock scorches higher.
Just like most of big tech, Nvidia topped in early September, hitting roughly $588 a share. We’ve had spurts above that level, but none of the rallies have been sustainable.
That’s despite a shortage in semiconductors keeping demand elevated. It’s also despite the crypto-mining market keeping demand high for mining-specific chips.
Even with strong earnings and an impressive GTC event (where management again updated its guidance above consensus expectations), Nvidia stock couldn’t get moving.
Others like Apple and Amazon have been experiencing the same thing - strong operations and better-than-expected results but a stagnant share price.
For Nvidia though, shares finally broke out after the company’s most recent earnings report. Now investors are trying to figure out just how far this stock can run.
Trading Nvidia
Shares stumbled for a day after the company reported earnings in mid-May. Growth stocks were still in a bear market and investors weren’t sure if they should buy Nvidia despite strong results.
It took a day to figure out, but then they started to gobble up the stock.
However, with sustained growth acting as a tailwind and a 4-for-1 stock split coming on July 20, buyers may continue to bid this name higher. That’s what we saw near the end of summer last year with Apple and Tesla.
In any regard, the rally here has been steep and while Nvidia stock has rested for a few days at a time, it still has not tested 10-day moving average in almost a month.
As it stands now, shares are hitting the 161.8% extension areas from both the larger and shorter ranges from 2021. Additionally, there is a bit of divergence on the Williams %R reading.
These observations have me a bit cautious on the stock in the short term, but not in a bearish way. Rather, it leaves me mindful of some potential consolidation, which to be honest, would be healthy after such a big rally.
That said, I am bullish on Nvidia. If this stock can maintain the 10-day moving average and hang around $700, it opens the door for higher prices. Specifically, it keeps $750 to $766 on the table, the latter of which comes into play around the two-times range extension.
At $750 post-split, Nvidia would be trading at $187.50. That could leave room up to $200 in a post-split world or $800 in pre-split world.
For long-term investors or traders, the 261.8% extension up near $860 seems impossibly far off, but if Nvidia can continue to trend higher, I wouldn’t rule this target out in the future.
On a close below $690 and the 10-day moving average, we could get a retest of the $650 breakout level and/or the 21-day moving average.