Should Nvidia Rise 12% in a Week?

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24/7 Wall St. Insights

• Nvidia Corp. ( NASDAQ: NVDA ) stock gained 12% last week, adding $400 billion to its market cap
• Are the shares priced too high?
• Also: Discover the Next Nvidia .

Nvidia Corp. ( NASDAQ: NVDA ) stock increased 12% last week. That means it added $400 billion to the company's market cap. The S&P 500 rose less than 3%.

Why? On paper, there was no reason. Concern is growing that large tech companies have overspent on artificial intelligence (AI) and it will take them a year or more to get returns. That would argue for slowing chip purchases used to expand these businesses.

In addition, the U.S. Department of Justice reportedly thought Nvidia might have used its market dominance to hamper competition. Microsoft Corp. ( NASDAQ: MSFT ) and OpenAI are also being investigated. There is some confusion about the accuracy of that reporting.

The company was also hit by a patent infringement suit from much smaller Xockets. It might look like a nuisance, but court judgments are unpredictable.

Nvidia and Microsoft were accused of taking videos from a YouTube creator to build their media libraries.

What has happened? It's likely one of two things. One is that Nvidia’s shares sold off by 15% and hit a recent bottom on September 9. Some investors may have believed such a decline misrepresented Nvidia's value and the jump last week was simply a repricing back to earlier levels.

The other is based on the adage that Wall Street crawls a wall of worry . There is uncertainty, but people do not want to miss a runup that could make them money.

Nvidia may be priced too high, but some investors believe it is not.

Prediction: This 1 Thing Will Be Nvidia’s Biggest Growth Driver Yet

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