Nvidia (NASDAQ: NVDA) has been a standout in the stock market, driving broader indices with its high trading volume. However, BTIG has raised concerns about the hype surrounding the chipmaker’s stock, particularly after the announcement of a stock split on June 7. The current trading volume for Nvidia is 90% above average, with about 80 million shares being traded, which is comparable to the volume on earnings day in May. This has pushed the nominal traded value to around $90 billion, the second highest in history after March 8. BTIG analysts noted that the stock had previously seen a significant drop of 22% after reaching such highs.
Moreover, Nvidia’s stock is currently trading around 85% above its 200-day moving average, a level that has only been reached a few times over the last decade. Historical instances include in 2016 when the stock was at $30, in 2020 at $125, in 2023 at $400, and in March 2024 at $900. BTIG believes that such a rapid and extreme move for Nvidia, as the world’s second-largest company, is unexpected and may lead to a swift reversal in the near future.
On the other hand, the broader market is exhibiting a different trend, with volume for the SPDR S&P 500 ETF (NYSE: SPY) being 25% below average, trading at less than 40 million shares. This indicates a lack of similar enthusiasm or activity in the overall market compared to Nvidia’s stock. BTIG’s analysis suggests that such diverging market activities could hint at potential shifts in sentiment and trading patterns in the coming weeks.
In conclusion, Nvidia’s exceptional performance in the stock market has attracted significant attention and trading activity, but some analysts are cautioning against the levels of hype surrounding the stock. While the company’s stock continues to soar, reaching historical highs in trading volume and value, concerns have been raised about the sustainability of such levels. The contrast in market activity between Nvidia and broader indices like the S&P 500 ETF further adds to the complexity of the current market landscape, prompting investors to stay vigilant and adapt to potential changes in market dynamics.
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