In a year dominated by the hype surrounding artificial intelligence, semiconductor stocks have flourished — and none more so than Jensen Huang-led industry leader Nvidia (NASDAQ: NVDA). However, after a period of continued outperformance, Nvidia stock lost momentum in late November.
The chipmaker’s Q3 FY 2025 earning report was far from a failure — but with the stock continually breaching new all-time highs (ATHs), investors initiated a deluge of profit-taking. A day before the earnings call, Nvidia stock was trading at $147.01 — in short order, it collapsed to $135, before reclaiming the $145 mark and experiencing another drop — this time reaching prices as low as $128.91.
On a year-to-date basis, Nvidia stock is up 191.50% and had recuperated to a price of $140.41 by press time. In the last 30 days, the price of an NVDA share has increased by 3.10% — although a very notable dip can be seen on the monthly chart.
Picks for you
As is the case with any stock that has seen triple-digit returns and high valuations, Nvidia is often in the crosshairs of short-sellers eager to profit from downward corrections. Now, as we’re reaching the end of 2024, there seems to be a renewed interest in NVDA stock from bearish traders.
Nvidia stock short interest is at a monthly high
While it’s impossible to tell how much of an impact short sellers have had on Nvidia’s seemingly temporary downturn, according to FINRA data retrieved from Fintel by Finbold, the short volume ratio for Nvidia stock has been consistently high in December.
On December 5, NVDA shares saw their latest round of downward momentum — at the time, the short volume ratio stood at 38.02, before gradually increasing to 45.77 by December 10. Since then, with a few minor exceptions, investors have been extensively betting against the stock — per the latest available data, the short volume ratio for the stock was at 57.55 on December 23 — a monthly high.
This level of short interest would suggest that the current rally is temporary — although many would disagree. Wall Street equity researchers are almost unanimously bullish on NVDA stock — although, to be fair, their projections usually deal with 12-month price targets. Jim Cramer, a noted Nvidia bull, believes that there is plenty of upside to be had in the long term — although he recently noted that investors should be patient and wait for a more attractive entry point.
While there is certainly a case to be made for another dip, the trading days near Christmas tend to bring about the Santa Rally — a period in which markets are generally bullish. With a stock as popular and successful as Nvidia, shorting remains a risky bet — particularly in an atmosphere of cheer and optimism coupled with the recent move above $140.
Featured image via Shutterstock
