NVDA island reversal or is there further upside from here?

2 Jun

On the macro side of things it seems like the dreaded stagflation scenario is more likely than not. With GDP slowing, inflation persisting and unemployment creeping up the overall economic outlook doesn't seem great. Add in the overseas tensions with two active wars and China seeming to increase aggressive talks on Taiwan, it would make any normal person hesitant to enter new positions.

With all that being said I find it hard to believe any of that has an impact on NVDA performance over the next 2-3 years. With their significant lead in both hardware and their dominance in software with CUDA I don't think any true market share will be taken from AMD or Intel. NVDA has done a great job of creating a community around its products and companies are afraid to stray away from their products because they don't want their investors to worry about them falling behind competition.

Looking at the chart its had some significant bullish moves in the last month and many are worried of a potential island reversal. This is very possible with everyone worrying more and more about the economy, but I believe the corporate spend will continue to rise as many of the large cap companies have hoards of cash reserves to spend on R&D. Yes the lower end consumer is likely to be impacted over the next year, but the large caps are going to use their money now to advance their positioning in their subsequent markets. Yes the companies authorizing all this increase in spend for NVDA products will likely take a hit, but NVDA itself is likely going to continue dominating.

I see a slight draw down coming after the stock split possibly retesting previous trend resistance around 1050, but inevitably continuing this monstrous bull rally.


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