Nvidia's upward momentum persists despite overbought signals

Nvidia reported impressive earnings for Q1 2025 with significant increases in revenue and earnings compared to the previous quarter and the same period last year. The company's GAAP earnings per diluted share saw substantial growth, while non-GAAP earnings also demonstrated strong performance. This article presents the technical analysis of Nvidia to find the price projection of this recent rally.

Nvidia earnings

Nvidia reported impressive earnings for Q1 2025, with revenue reaching $26.0 billion, an 18% increase from Q4 2024 and a 262% increase from Q1 2024. The company's GAAP earnings per diluted share soared to $5.98, a 21% increase from Q4 2024 and a 629% increase from Q1 2024. Nvidia's founder and CEO highlighted the company's pivotal role in the burgeoning AI sector, driven by strong demand for generative AI across multiple industries. Nvidia's strategic advancements, such as the full production of the Blackwell platform and the launch of Spectrum-X and NVIDIA NIM, position the company for continued growth. Additionally, Nvidia announced a ten-for-one forward stock split to make its shares more accessible and a significant increase in its quarterly dividend by 150% to $0.10 per share, further enhancing shareholder value.

Technical price development for Nvidia

Nvidia has maintained a strong bullish trend, consistently breaking record highs despite overbought conditions on technical charts. This strength is attributed to the company’s robust financial achievements driven by high demand for technological advancements and AI innovations. The monthly chart below illustrates a significant bottom formed in 2022, highlighted by an inverted head and shoulders pattern with the head around $10 and shoulders at $14.04 and $13.88. The neckline at $19 was breached, initiating a strong surge that pushed the price to the $50 mark. Upon reaching this region, a symmetrical broadening wedge pattern formed, which subsequently broke higher, setting new records. The first quarter of 2024 saw fluctuations due to geopolitical tensions in the Middle East, particularly the Iran-Israel conflict, which created uncertainty among investors. Despite this, Nvidia's price surged to a new record of $140.76, where it is currently stabilizing and showing signs of consolidation. Throughout this journey, the price has remained overbought and has not corrected lower which increases the risk environment on technical charts.

Identifying Nvidia's future price targets

To further understand and determine the target of this bullish move, the log weekly chart shows an ascending broadening wedge pattern stretching from the 2018 low of $3.09. The target of this pattern lies significantly higher, indicating that prices may continue to rally. The historical formation of the inverted head and shoulders pattern at the support line of the ascending broadening wedge and the subsequent price compression around $50 suggest that prices may stay elevated for an extended period and continue to rally towards higher targets of around $200. Therefore, investors may consider buying Nvidia on dips. However, the extremely overbought conditions present a market risk of a deep correction, and investors should take this risk into account when managing their portfolios.

Bottom line

In conclusion, Nvidia has reported outstanding earnings for Q1 2025, with significant revenue and earnings growth driven by the booming demand for AI and technological advancements. The company’s strategic initiatives, including the production of the Blackwell platform and the introduction of Spectrum-X and NVIDIA NIM, position it for continued growth and market leadership. Technically, Nvidia has shown a strong bullish trend, breaking record highs and maintaining elevated prices despite overbought conditions, with patterns such as the inverted head and shoulders and ascending broadening wedge indicating potential for further gains. However, investors should be cautious of the market risk posed by the extremely overbought conditions and consider this when managing their portfolios.

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