What’s going on here?
Nvidia is on the verge of overtaking Apple to become the world's second-most valuable company, spurred by its central role in advancing AI technology.
What does this mean?
Nvidia's stock value has soared to $2.72 trillion, highlighting the critical reliance on its tech for AI. Meanwhile, Apple's market value at $2.93 trillion faces challenges from declining iPhone demand and stiff competition in China. While Apple’s growth has slowed, Nvidia has tapped into booming sectors like gaming, cryptocurrency, and AI. As a result, major US indices like the S&P 500 and Nasdaq have reaped significant gains from Nvidia, contributing over a third of the S&P 500's gains this year.
Why should I care?
For markets: AI propels Nvidia to market dominance.
In 2024, Nvidia set records by scaling from $1 trillion to $2 trillion faster than Amazon, Alphabet, and Saudi Aramco. Driven by high demand for its GPUs as AI integrates into Big Tech, Nvidia has consistently surpassed Wall Street’s expectations. Plus, its stock trades at 37 times forward earnings, down from 48 times last year, according to LSEG data–showing growth without inflated valuations.
For you: Nvidia's investment appeal is skyrocketing.
Options traders are all in, with Nvidia call option trading volumes exceeding a million for five consecutive sessions–a first in its history. This strong activity indicates bullish sentiment, marking Nvidia as an investment worth watching.
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Originally Posted May 31, 2024 – Nvidia Set To Surpass Apple As AI Revolution Fuels Its Growth
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One must ask whether the current trajectory can be sustained. Unfortunately, there is no way to paste an image of the NVDA stock chart in these comments, yet if you look at the chart it is fairly easy to see that since Nov. 1, 2023, NVDA has been on an ever steepening curve touching at Jan 3, Apr. 19, may 14, & May 22, 2024. The next touch will intersect with a curve that is nearly vertical, & if extrapolated further would actually need to bend backwards in time which is an impossibility, so I observe that it necessarily must break down on or before June 21, 2024. The question then will be whether it will equilibrate at some lower value, or if another impetus will be found to propel it even higher. Either way, many will likely get fooled into investing at too high a price & may need to wait many years to recoup the coming correction.
Looking at the chart for NVDA, it is perhaps easy to see that if the current trend is extrapolated into the future the price will intersect with a nearly vertical curve by June 21, 2024. History has shown that when this occurs a stock’s price must necessarily break down, since it is unnatural for any stock to sustain such a singularity. The next questions will then be, can the stock find another impetus to march forever higher, or will it merely equilibrate & languish at some lower reasonable value leaving many holding stock that they bought at too high a price. The market makers likely already know the playbook for NVDA & many retail traders will inevitably get burned.