Nvidia stock rally 'likely to result in a swift reversal over coming weeks'

AI darling Nvidia (NASDAQ:NVDA) continues to dominate the stock market, driving broader indices with its extraordinary volume. However, according to BTIG, the hype surrounding the chipmaker’s stock has reached extreme levels, especially following the company's announcement of a stock split on June 7.

Per BTIG, Nvidia’s current trading volume is running 90% above average, on pace for approximately 80 million shares, which rivals its volume on the 23rd of May earnings day. This surge positions its notional value traded around $90 billion, the second highest in history, trailing only behind March 8.

“That essentially marked the high for the stock until its earnings last month, and included a 22% drawdown,” BTIG analysts noted.

Moreover, NVDA stock is currently trading roughly 85% above its 200-day moving average (DMA). BTIG highlights that this extreme level has only been reached in a few instances over the past decade: in 2016 when the stock was at $30, in 2020 at $125, in 2023 at $400, and in March 2024 at $900.

“This type of move as the second largest company in the world is stunning, and in our view, likely to result in a swift reversal over coming weeks,” the investment firm wrote.

Meanwhile, the broader market shows contrasting activity. The SPDR S&P 500 ETF (NYSE:SPY) volume is 25% below average, with a pace of less than 40 million shares.