Ahead of concerns about the U.S. reaching its debt ceiling limits, the technology sector booked sharp gains. The Nasdaq (QQQ) ETF added 3.5% for the week, led by Nvidia (NVDA) posting a sharp revenue decline.
Markets ignored Nvidia’s excessive valuation before it posted quarterly results on May 24, 2023. It overlooked the company’s revenue declining by 13.3%. Revenue from the graphic card supplier for the PC market beat expectations by $670 million. Furthermore, its Q2 revenue outlook of $11.0 billion was jaw-dropping. This exceeded the consensus of $7.11 billion.
Nvidia’s CEO, Jensen Huang, guided strong revenue based on the artificial intelligence’s iPhone moment. He appealed to investors who missed out on Apple’s incredible product cycle in the smartphone market. Those who doubted Apple back then might miss the AI super cycle.
As a result of FOMO, NVDA stock gained 24.57% last week. It surpassed its all-time high of around $350, set in late 2021. At nearly $1 trillion in market cap ($975.94 billion), Nvidia stock could surpass a $400.00 share price. Fundamental investors who refused to pay over 50 times forward earnings cannot rationalize the recent rally.
Nvidia is running on unwavering momentum. That could continue or end at any time. The peak of the tech bubble is unknown, with Nvidia at the forefront of it.
