Nvidia, a leading semiconductor company listed on NASDAQ as NVDA, has been a standout success story in the market, particularly since its foray into the artificial intelligence (AI) sector. Despite its impressive year-to-date rally of over 170%, recent technical indicators are suggesting potential trouble ahead for the high-flying stock.
One key technical indicator, the Relative Strength Index (RSI), has been consistently showing high values, raising concerns about the sustainability of Nvidia’s current price levels and sparking fears of a potential crash. Over the past week, the RSI has remained alarmingly high, with readings well above the critical threshold of 70. On June 17, it stood at 78.72, while on June 14, it was even higher at 80.81.
These elevated RSI readings have coincided with Nvidia’s recent 10-for-1 stock split on June 7, resulting in an over 8% increase in the stock price post-split. While the RSI is a widely used momentum oscillator to identify overbought or oversold conditions, the current high readings are signaling a potential correction in Nvidia’s stock price.
Market sentiment towards Nvidia has been overwhelmingly positive, with the company being among the top performers in the technology sector. However, analysts are now forecasting a downside for the stock, with an average price target of $126.88 in the next 12 months. This represents a 3.13% decrease from the current valuation of $130.98.
If Nvidia does experience a correction, it could have broader implications for the tech sector and the overall market, given the company’s significant influence, particularly in the S&P 500 index. Only 30% of S&P 500 stocks have outperformed the index year-to-date, with Nvidia ranking among the top gainers.
It is important to note that the information provided in this article should not be taken as investment advice, as investing always carries inherent risks.
