Nvidia’s stock has surged 84% in under four months, briefly reclaiming its position as the world’s most valuable company. The rally is supported by strong tailwinds, including a U.S. policy reversal that allows Nvidia to resume AI chip sales to China.
Analysts have taken notice, with some warning investors of an overheating investor sentiment. Jonathan Krinsky of BTIG noted that Nvidia’s 14-day relative strength index topped 80, suggesting overbought conditions. However, the company’s data center revenue is expected to recover a significant portion of the $15 billion in lost revenue.
Nvidia’s valuation has raised questions about how much future success is already priced in. The stock trades at 34 times its expected earnings over the next 12 months, higher than its five-year average. Investors will closely watch upcoming earnings reports from tech giants, including Alphabet, Microsoft, and Meta, which influence Nvidia’s bottom line.
Despite a Strong Buy consensus rating on NVDA stock, analysts warn of cautious outlook due to rising valuation and potential cyclical challenges in the AI business. The average price target is $182.06 per share, implying 5.5% upside potential.
Source: https://www.tipranks.com/news/nvidia-stock-nvda-may-be-overheating-says-btig-analyst