Ad
Nvidia is definitely one to watch this week. After reporting an absolute blowout last week, the Club name has traded lower. Early Tuesday, it was looking to bounce off Friday’s close of $215, before some pressure set in. Why does that matter? We know the fundamentals are as strong as ever at the AI chip powerhouse. A bounce to start the week could swing the technical setup in our favor. A lower close might signal the opposite. Looking at the chart of Nvidia, we have overcome resistance in the $210 to $215 area that was twice rejected by sellers over the past year — once back in October 2025, when the stock topped out at $212.19, and again in late April, when the stock topped out at $216.83 apiece. The stock recently broke through, trading up to an all-time high of $236.54 on May 14, less than a week before earnings. That should have turned the old resistance of $215 into new support, according to the Principle of Polarity in technical analysis. Shortly after hitting a record, though, Nvidia shares were already pulling back and accelerated their decline after the print. The Principle of Polarity holds that support, once broken, becomes resistance. That’s what makes the slide to $215 so important, because if that is materially broken to the downside, then the now expected level of support will have broken, and become resistance once again. Then we’re right back to those stubborn levels of late April. NVDA YTD mountain Nvidia YTD A higher Nvidia close Tuesday, could signal a stock that’s ready to solidify its next leg higher. Should it fail to advance, however, the plan laid out by Jim Cramer in his weekly column may well be the only thing management can attempt to get shares working again. Jim wrote that Nvidia should consider a page from Apple’s cash return to shareholders playbook. You know the one that saw Apple return nearly all its excess cash to shareholders over the past decade, which reduced the company’s share float by over a third. Reducing the share count increases investors’ ownership in a company even if they take no action. Reducing the supply of shares also tends to lead to increases in prices. Apple stock has gained 1,140% in the past 10 years. Short of an Apple-type cash return model — and because Nvidia options traders are basking in fat premiums that have them more than happy to sell upside and pinning the stock price — Jim said we may need to consider scaling back our Nvidia position size. To be clear, that’s not to say we are anywhere near considering an exit. We’re not about to give up on the incredible value these shares represent, especially when the earnings are still growing rapidly, and all signs point to sustained demand. There is an old saying on Wall Street from technician Ned Davis. In his book “Being Right or Making Money,” Davis details an account from a senior trader who asked him plainly: “Do you want to be right, or do you want to make money?” Why does it apply here? We know we are right on Nvidia — from the numbers to the story, to the technology, to the customer demand, to the supply chain. We know beyond a shadow of a doubt that Nvidia is undervalued — way undervalued when considering what its peers are trading at. However, Nvidia is not making us much money these days. As Jim wrote in his column, this is a “what have you done for me lately business” — and lately, Nvidia stock hasn’t done too much. Sure, it ran from its year-to-date March 30 close of $165 to north of $236, but we’re now back to a level we could have cashed in at back in April. Heck, we were nearly here back to October 2025. So, if it doesn’t work soon, we may need to consider that we’ve already paid too much in opportunity cost and downsize a bit to reallocate that cash elsewhere. To be sure, even as we continue to believe that this is a name you must own in some amount for the long-term, the fundamentals may soon demand a tough decision. (Jim Cramer’s Charitable Trust is long NVDA, AAPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Ad
