(Bloomberg) — Nvidia Corp.’s record-breaking winning streak. is about to end after at least one technical signal warned that the stock rally was overheating.
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Shares of the Santa Clara, California-based company faltered on Wednesday after rising more than 20% during their most recent 10-day winning streak, adding nearly $220 billion in market value, according to data compiled by Bloomberg. This had pushed the stock’s relative strength index, a measure of bullish and bearish price momentum from 0 to 100, to over 70.
Such an elevated RSI level is generally viewed as a contrarian signal that a decline is imminent as buying is excessive. On Tuesday, the stock entered so-called overbought territory for the first time since July.
The latest rise comes as technology stocks rally amid cooling inflation and hopes that Federal Reserve interest rates have peaked. Nvidia also received an additional boost when it announced an update to its artificial intelligence processors.
“Nvidia’s story remains stronger than ever,” said Angelo Zino, senior equity analyst at CFRA Research.
Zino and his colleagues note that the faster-than-expected release of this new chip reflects the company’s desire to fend off any competition in this lucrative and high-demand AI category.
The stock, which has risen 240% this year, fell 1.2% after initially opening higher on Wednesday. The company is expected to report its results on November 21st.
Investor appetite for the stock that has dominated AI trading this year shows little sign of saturation. However, not everyone is optimistic. Michael Burry’s investment firm bet against a basket of semiconductor stocks that includes Nvidia, according to a regulatory filing Tuesday.
The story goes on
(Updates with constant stock movements.)
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