The last time it got this overbought, we saw a 20% sell-off during a five month consolidation process that ended in May. As I noted yesterday, the best stocks throughout history have shaken people out every year with catastrophic drawdowns. NVDA will not be immune to that dynamic and all good trades come to an end.
But what if it's more than a trade?
The idea behind the rise of NVDA is that it is the Intel of the AI age, as quintessential to all of the new technology trends as Intel once was as the PC revolution exploded across the world. The PC era really kicked into high gear in the mid-1990's with the launch of Windows 95 from Microsoft. Almost every computer running Microsoft was also running one of Intel's Pentium chips. It was a package deal we called WinTel, and the term "Pentium" became like Q-Tip – a brand name so powerful that it became synonymous with the whole category.
This continued on for five or six years until the tech crash, that really had nothing to do with computer sales.
Here's Intel's stock, in terms of percentage gains, from the start of 1995 – the company's watershed year – into March of 2000: