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- A Proper Time for Repositioning: NVIDIA
A Proper Time for Repositioning: NVIDIA
It looks like a right moment for repositioning in many major growth stocks, including tech giants like NVIDIA or Microsoft, as the S&P 500 and other stock indexes of Wall Street are quickly losing their previous upside momentum. A partial fixing (up to two-thirds) of the remaining profit could be a wise decision. Indeed, current quotes around $412-415 per share (on the pre-market trading) offer nearly 280% of investors' income since last Christmas, or at least 45% compared to the beginning of the AI-fuelled rally in mid-May. However, the price corrections for NVIDIA stocks is picking up steam to reach a 18% discount vs its highest points of the end of August when it just briefly tested the area above $500 per share.
Better a fowl in hand than two flying, especially since it rather looks as three or four of them now in hand, with only an extra one has gone into the sky. The low-closing candle on Wednesday, September 20, with zero activity in attempts to rebound and a strongly bearish night, may indicate higher chances for a further decline, with prices to drop to the lower areas between $350 and $400, and a set of negative scenarios that could not be excluded. Later, it is always possible to rebalance you portfolio using more aggressive buy strategies any time when the technical correction would be exhausted.
The recent broad market recovery seems to be over after the U.S. Federal Reserve's (Fed) officials sent its most hawkish message they were able to send considering a rate hike pause. The Fed's open market committee clearly paved the way to another rate hike in November or December and pointed to a longer regime of elevated borrowing costs by reducing the number of potential rate cuts in 2024 on its dot plot projections. Additional signs of stronger economic activity would mean that "we have to do more with rates," the Fed's talking head Jerome Powell commented at a press conference.
If so, then any AI boost may have only a delayed impact on financial results, including this segment's recognized leader. Slowing demand effects are possible, if we take into account a possibility of more affordable budgets of its corporate clients for immediate developing and testing new technologies.
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