This year's blowout rally in shares of Nvidia looks poised for a pullback in 2024, according to technical analysis from UBS Investment Bank Advisory Sales. "The Q4 NDX rally is a wave 5 of a larger degree and should complete the 2023 bull market in technology," the team said. "We are bearish mega cap technology and would short NVIDA where we see the risk of a 20% to 30% correction in H1." NVDA YTD mountain Nvidia shares have more than tripled this year Nvidia dominated 2023's market rally, surging more than 235% as excitement around artificial intelligence ballooned, and Wall Street bet on the chipmaker's graphics processing units powering large language models. The enthusiasm also incited a rally in mega-cap technology stocks and some of 2022's beaten-down behemoths. While many investors have come to view the surge in mega-cap names as the beginning of a "new super boom," the team regards heavy concentration in the so-called Magnificent Seven stocks as a potential "end cycle phenomenon." "Tactically, the NDX and hyped mega cap tech names such as NVDIA are minimum medium-term toppish, which implies a big reversal very early in 2024 as set-up for a big correction and where it is likely to see a negative surprise in H1," they wrote. — CNBC's Michael Bloom contributed reporting.
