The steady growth in the stock market of the technology giant Nvidia does not seem to want to stop.
Up until 24 May, NVDA‘s stock price on the Nasdaq had grown fairly linearly over the first few months of 2023.
It had started the year above $140, rising to $200 at the end of January, to $240 at the end of February, to $280 at the end of March, and finally to $290 at the end of April.
At that point, after +107% in four months, the growth looked like it might come to a halt.
Instead, on 25 May it posted another +25% in a single day, kicking off another phase of growth.
In total the cumulative gain in this second phase was 40%, bringing the net gain since the beginning of the year to 190%.
In other words, in five and a half months Nvidia’s share price has almost tripled.
Summary
The previous bull run of NVIDIA’s stock
It is worth noting that it had already done something like this between 2020 and 2021, when it went from $60 to $346, an incredible +476% in less than two years.
Taking the pre-pandemic value of about $60 as a reference, it first rose to $130 in August 2020, then from late May 2021 made a second climb to $346 in November.
So first a +115% over about six months, followed after a while by another +166% in another six months.
Then with the bear-market of 2022 the price had fallen a lot, down to $108, which was higher than the pre-bear market starting price, but lower than the price reached after the first six months of growth.
The post-bear market rebound started as early as October 2022, although it was still little until January 2023. Thereafter it posted three months of booms, followed by a small pause and a new boom.
It is worth noting that in 2023 the timing seems more accelerated.
The comparison between past and present
In 2020 the first major growth phase lasted about six months, with an initial +115%.
In contrast, in 2023 the actual first growth phase lasted only for a little more than three months, with eventually a +107% in line with the first growth phase in 2020.
The lateralization phase triggered in August 2020 lasted just under ten months, while the 2023 phase lasted just over a month.
Then in 2021 there was a second climb lasting another six months with another +166%.
However, it is by no means a foregone conclusion that the second growth phase of 2023 will also last that long, and have such a wide extension.
Indeed, it is important not to forget that the one in 2021 was a true generalized speculative bubble, while this time around it is a bubble specific only to artificial intelligence-related stocks.
Artificial intelligence
The reason why Nvidia shares are performing so well in the markets is that the company is by far one of the world’s leading producers of artificial intelligence chips.
Nvidia is famous for its high-powered graphics cards, so much so that in the past they have also often been used for crypto mining.
However, for several years now they have not been used for Bitcoin mining because they have been replaced by even more powerful devices (ASICs), and as of September last year they have not even been used for Ethereum mining because with the switch to Proof-of-Stake, Ethereum is now no longer mined.
Unlike ASICs, which are designed to do one thing, Nvidia’s graphics cards have very powerful computing processors that can be used to do a variety of things.
Apparently they are perfect for machines that work with artificial intelligence.
The real boom in artificial intelligence has skyrocketed the demand for the stock of what is the world’s leading manufacturer of AI chips, and this explains the real bubble going on.
However, according to many, even this bubble will burst sooner or later, but at present it is difficult to say when.
The point is that should the price rise much further, the fall due to bursting could start from very high, and perhaps even stop very high compared to current values.
However, if it will be like in 2022, the post-burst price could be lower than the trigger price of the second growth phase, namely the $300 in May.
Currently, the price is already well above $400.
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