“It’s definitely getting overbought, and while that doesn’t mean a reversal is imminent, this is something to be mindful of,” said Jonathan Krinsky, chief market technician at BTIG. “It feels like sentiment, which had been optimistic, is getting borderline giddy.”
Nvidia, which dominates the market for chips used in artificial intelligence computing, has staged a dramatic reversal since April when a broad tariff-induced selloff added to fears about a potential pullback in AI spending. Since then, the firm’s biggest customers have continued to plow more money into the development of AI services and investors have flocked back to the stock, pushing it up more than 80% in less than four months. The stock fell as much as 1% on Friday.
The latest leg of the rally has been driven by news that Nvidia plans to resume sales of some AI chips in China with the approval of the US government. The policy reversal from President Donald Trump’s administration could help recover a large chunk of the US$15 billion ($19.2 billion) in Nvidia’s fiscal 2026 data center revenue that had been at risk from US chip export restrictions, according to Bloomberg Intelligence analyst Kunjan Sobhani.
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This week, Trump also touted more than US$92 billion in commitments to invest in AI and energy infrastructure, while Meta Platforms Inc CEO Mark Zuckerberg affirmed plans to spend “hundreds of billions of dollars” on data center investments. The Facebook parent is Nvidia’s second-largest customer, after Microsoft Corp., according to supply chain data compiled by Bloomberg.
Nvidia is on track for its eighth-straight week of gains and the rally from its April low has added roughlyUS $1.9 trillion to its market value, a figure that alone exceeds the market capitalisation of Meta. At more than US$4.2 trillion, Nvidia is again the world’s most valuable company, topping second-ranked Microsoft by about US$400 billion.
“Clearly, momentum is behind it,” said James Abate, managing director and head of fundamental strategies at Horizon Investments. “It seems like every time we get incremental good news, buyers rush in and we get another leg up in the stock.”
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Still, Abate has used the advance to sell some Nvidia shares. In addition to the rising valuation, he said he’s concerned that investors are underestimating the potential for “the future cyclicality of the AI business.”
Nvidia is priced at 34 times earnings expected over the next 12 months, up from a low of less than 20 in April, but well below the average of about 40 over the past five years.
Most on Wall Street remain bullish about Nvidia’s prospects on increasing positive signs about AI demand, including a robust forecast from Taiwan Semiconductor Manufacturing Co on Thursday. Of the 79 analysts tracked by Bloomberg that cover the company, just one has a sell recommendation, while nine rate the stock neutral.
Investors will be paying close attention in coming weeks to earnings results from Big Tech companies for hints about capital spending plans. Alphabet Inc. is scheduled to report on July 23, followed by Microsoft and Meta on July 30. Those three companies and Amazon.com Inc. account for more than 40% of revenue for Nvidia, whose results are due in late August.
Rhys Williams, chief strategist at Wayve Capital Management, sees no reason to take profits on Nvidia with all signs pointing to AI spending continuing.
“Nvidia has had a nice breakout, and it will need to have a good quarter and raise its outlook, but we expect that will happen,” Williams said. “We probably have another year or two of strong data-center growth.”
