Hey everyone, let's talk about what's going on in the market right now. If you've been checking your timeline lately, you probably saw that hot alert from Coin Bureau about Nvidia showing a pretty massive spike in credit risk, getting super close to its all time high.
To break down the numbers quickly
- Nvidia's 5Y credit default swap or CDS spread is currently sitting at 79.8 bps.
- This huge jump is more than double where it was back in late may.
- It is just a tiny step away from the record high of 83.7 bps hit back on july 29.
This sharp increase in the cost of insuring against a default has got a lot of people worried. Folks are starting to wonder if the whole AI boom is getting heavily fueled by debt and circular money loops instead of purely organic market demand.
Crazy Valuations Met With Insane Profits
Taking a look at the financial reports, Nvidia's business scale is on an entirely different planet. Their market cap is sitting around a massive $5.27T with an enterprise value of about $5.20T.
Sure, the price looks pretty expensive when we look at a trailing P/E of 33.32 and a forward P/E of 24.81 however, their actual business performance is moving at full speed without hitting the brakes. Their profit margin smashed it at 62.97%, and their return on equity or ROE is hanging out at an incredible 114.29%, showing just how good management is at turning capital into pure net income.
What Wall Street Analysts Think About Price Targets
Wall Street analysts are still showing major support for this tech giant without throwing any shady signals our way.
Take rosenblatt as an example, giving a solid confidence score of 82 out of 100 with a buy rating. The average price target from the consensus sits comfortably around $302.83, which is way higher than the current market price of $217.50. On top of that, Wells Fargo recently came out and reaffirmed their bullish stance with a target price locked at $315.
Shifting over to the daily technical chart, Nvidia's price action looks super interesting after shaking off some heavy selling pressure recently.
We can see a double bottom pattern forming between june and august, which usually acts as a reliable signal for a bullish trend reversal. Price is currently holding ground at $217.50, safely above the 50 day moving average. Plus, the stochastic indicator is starting to climb out of the oversold zone, giving us some nice room for a potential upside push.
If we zoom in on the 4H chart, the price structure is carving out a clean ascending channel inside a solid upward corridor. Higher highs and higher lows have been printing nicely ever since that bottoming phase finished up.
Even though the momentum indicator flashed a tiny bit of saturation near the top, buyers are still clearly running the show. Strong support zones ranging from $177 down to $173 are acting as great cushions if any healthy market corrections pop up along the way.
To wrap it all up, while Nvidia's fundamentals and chart setups look genuinely strong and bullish, we still need to keep a close eye on those rising credit risks and heavy valuations to make sure our funds stay safe and sound.
Click here to read my authentic and original analysis
⛔Disclaimer - This analysis is for educational purposes and reflects personal opinion only, not financial advice. Always practice risk management and use stop losses (SL) according to your own risk tolerance.
