The global tech selloff led by AI-linked semiconductor companies has been particularly tough for Nvidia Corp, as the Jensen-Huang led chipmaler is strugging to recover from the decline.
The stock has fallen over 7% this week so far and traded over 3% lower on Thursday despite a short-lived tech rally triggered by fellow chipstock Micron Technology Inc.
While its dominant position in the AI world still remains intact with a record $5 trillion Mcap, some technical indicators may be signalling at a possible top out, as per reports.
Nvidia's weekly and monthly charts are dotted with several bearish formations, according to a Bitcoin world reported citing technical analysts.
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According to the report, the stock has formed a potential double top pattern near its all-time highs, often regarded as a classic reversal signal. Its long-drawn rally seems to be dying down as volume analysis points to a slide in the buying pressure, the report added.
As of 12:20 p.m. EST, the scrip pared some losses to trade 1.2% lower at $196.55.
Has The Stock Reached Its Peak?
While indicators may be pointing to a downturn in the near-term, the stock may still have some steam in it for a marathon.
"I would not call this a confirmed top yet. It is a valuation reset in a late-cycle AI trade. The next leg depends on visibility around Blackwell, Rubin, and proof that AI spending is generating real cash returns for customers," said Harshal Dasani, Business Head, INVAsset PMS.
He argued that while the peak price or top out view may have some merit, the stock is no longer being rewarded simply for growth but rather, "being judged on whether hyperscaler capex can keep compounding without balance-sheet strain, margin pressure, or customer pushback."
ALSO READ: AMD, Intel, Qualcomm Ride On Micron's Bullish Forecast As AI Chip Stocks Soar Up To 19%
Heated Rivalry
The stock's valuation seem to be stretched too far, as it trades at over 30 times forward earnings, an exceptionally difficult gain to sustain for high growth firms, according to reports.
On top of that, rivals like Advanced Micro Devices Inc. and Micron technology — while not in the same league as of yet — appear to be catching up quite quickly.
Micron's historic bull run pushed the company past $1 trillion market capitalisation and a step closer to Nvidia's bastion just last month. After a posting blockbuster numbers for its third quarter earnings, and an even stronger forecast, the rally for MU is far from over.
Investors are closely eyeing any slip up on Nvidia's end surrounding AI capex as competition from AMD, Intel, and custom chip designs from cloud giants like Amazon and Google is intensifies.
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