Key Insights
- Nvidia stock is hovering near its all-time high.
- The AI Bubble Index has jumped to 57, suggesting that it is not a frenzy.
- This index suggests that the stock has some more upside.
Nvidia stock remained near record levels after rebounding sharply from its summer correction. NVDA closed Sept. 4 at $230.36, around 2.6% below its $236.54 record.
The latest AI Bubble Index reading also rose to 57. That indicates elevated speculative activity, but it remains below the index’s higher-risk categories.
AI Bubble Index is Rising
A key risk facing the stock market is the fear that the artificial intelligence industry is in a bubble that may burst soon. Some top analysts, including billionaire Ray Dalio and Michael Burry, have warned that the bubble will ultimately burst.
The closely watched AI Bubble Index has continued rising in the past few weeks, moving to the “heating up” level of 57. This is a positive thing for the sector since it is not yet in the elevated or mania stage of the cycle.
The index is created by focusing on key metrics like valuations, market concentration, momentum, sentiment and hype, and systemic risks. In most cases, bubbles burst when there is a mania. This is what happened during the dot-com and housing bubbles.
Nvidia would be one of the biggest casualties if there were an AI bubble because it has become its top beneficiary. It is the biggest supplier of the advanced GPUs that power the industry.
At the same time, the company has invested substantial sums in sector players, including popular names such as Lumentum, CoreWeave, Nebius, Marvell Technology, and Intel. All these companies would retreat sharply if the bubble burst.
Nvidia Has Some Potential Catalysts
Separately, Nvidia stock has some key catalysts that may boost its performance. For example, it has made some large investments in companies like Anthropic and OpenAI, which are preparing to go public.
Anthropic has selected Goldman Sachs and Morgan Stanley as the lead bankers for the deal. At the same time, it is expected to release its prospectus as soon as this week. Its IPO will value it at over $2 trillion, substantially increasing Nvidia’s stake.
OpenAI, which brought AI into the mainstream, is also expected to go public either this year or in 2027. Nvidia has invested about $30 billion in the company. This means that its valuation will increase substantially if it goes public at a $1.5 trillion valuation, as many traders on Polymarket predict.
Nvidia stock will also benefit from the ongoing revenue and profitability growth. The most recent numbers showed that its revenue in the second quarter was more than double what it made last year.
Jensen Huang, the CEO, believes that the trend will continue in the foreseeable future, with its 2027 figure rising by 77%. This is important as the revenue growth has been accompanied by high profits. Its gross profit remains at over 70%.
Nvidia Stock Technical Analysis
NVDA stock has staged a strong recovery after hitting $189.62 in July this year. It has jumped to nearly $236, its all-time high and an important resistance level that it needs to cross.
The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bulls remain in control. It has also moved above the Supertrend indicator.
The stock has also jumped above the Major S/R pivot point of the Murrey Math Lines tool. Therefore, it is likely to continue rising as bulls target the ultimate resistance of the Murrey Math Lines tool at $250. This view will be confirmed if it moves above the year-to-date high of $236.
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