Are you keeping an eye on Nvidia’s recent surge in the market? The graphics processing unit maker has seen its stock price skyrocket by roughly 20% in just three trading days following a positive earnings report. Year to date, the stock has more than doubled, making Nvidia a $2.8 trillion company, just behind giants like Apple and Microsoft in the S&P 500.
While many investors may be excited about Nvidia’s growth, some market watchers are starting to sound the alarm. With a P/E ratio of 66 and trading well above its 50-day and 200-day moving averages, some experts are questioning whether Nvidia is becoming overvalued.
In a recent newsletter, Josh Brown of Ritholtz Wealth Management raised concerns about Nvidia’s meteoric rise, asking whether the company should really be larger than behemoths like Apple and Microsoft. He noted that any threat to earnings growth expectations could be the trigger for a correction in Nvidia’s stock price.
Jonathan Krinsky of BTIG also cautioned investors to be wary of an impending pullback, suggesting that a 12% to 14% drawdown from the recent highs wouldn’t be surprising. He pointed out that Nvidia’s current price action is above its upper Bollinger Band, which could indicate the stock is overbought.
On the other hand, Wolfe Research’s Rob Ginsberg highlighted Nvidia’s dominance in the market and the potential for further gains. However, he advised investors to consider locking in profits, especially given the stock’s deeply overbought condition and general euphoria surrounding the company.
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