CHART OF THE DAY: Nvidia breaks out of 8-month holding pattern to record high
YCharts
- Nvidia has broken out of an eight-month trading range to a new record high of almost $550 per share.
- The AI-tech company now sports a market capitalization of $1.34 trillion, within spitting distance of Amazon.
- Fairlead Strategies co-founder Katie Stockton said Nvidia could climb to $602 following the breakout.
Our Chart of the Day highlights the recent breakout in Nvidia's stock to new all-time highs.
Shares were trading in a sideways consolidation range for eight months before they decisively broke out above $500 per share on Monday. The gains piled up on Tuesday and Wednesday as well, with the stock hitting a record intra-day high of $546.
Nvidia now has a market capitalization of $1.34 trillion, making it the fourth most valuable company in the S&P 500. And it's just $250 billion away from overtaking Amazon as measured by market capitalization.
Nvidia has been on a tear over the past year thanks to the generative AI revolution. The company sells the most in-demand chips that help enable AI technologies.
Fairlead Strategies' co-founder Katie Stockton thinks the gains in Nvidia stock could continue following the technical breakout above $500.
"Heavyweight Nvidia decisively cleared key resistance near $504 yesterday [Monday] in an unconfirmed breakout. The breakout resolved a four-month trading range higher in a bullish intermediate-term development, noting the weekly MACD has a new 'buy' signal. The breakout resumes Nvidia's long-term uptrend for an initial projection of ~$602," she told clients on Tuesday.
The $602 technical price objective from Stockton represents 11% upside from current levels.
While Nvidia stock has soared nearly 250% over the past year, its earnings multiple has plummeted, according to data from market veteran Ed Yardeni.
He highlighted in a note on Monday that Nvidia's forward price-to-earnings ratio dropped from a record high of 84.3x on June 14 to just 26.4x today. While that represents a premium to the S&P 500's forward P/E multiple of about 20x, it is below Amazon's and Microsoft's multiples, and about the same as Apple's.
"The stock market may have started to discount our tech-driven, productivity-led Roaring 2020s scenario on November 30, 2022," Yardeni said, referring to the date when ChatGPT made its public debut.