Despite NVIDIA (NVDA.US) investors continuing to find reasons to boost holdings, the stock's blistering rally shows mounting signs of overheating. On Thursday, the chipmaker's 14-day Relative Strength Index (RSI) surged past the critical 80 threshold, reaching heights unseen since June 2024—a period preceding a six-week plunge exceeding 20%. This momentum indicator, tracking recent price volatility, flashes overbought warnings for some analysts when breaching 70.

Jonathan Krinsky, BTIG's Chief Market Technician, observed, "Overbought conditions are glaring. While not signaling imminent reversal, vigilance is essential. Sentiment has shifted from optimism toward near-euphoria."

The AI computing chip leader has staged a stunning comeback since April, when tariff-fueled selloffs amplified fears of shrinking AI investments. Relentless spending by major clients on AI services has since propelled an 83% price explosion in under four months. The latest catalyst emerged as U.S. regulators greenlighted resumed sales of select AI chips to China. Bloomberg Intelligence analyst Kunjan Sobhani noted this policy reversal could safeguard $15 billion of NVIDIA's fiscal 2026 data-center revenue previously jeopardized by export controls.

This week also witnessed the Trump administration securing over $92 billion in AI and energy infrastructure commitments. Simultaneously, Meta (META.US) CEO Mark Zuckerberg pledged "hundreds of billions" for data-center expansion. Supply chain data confirms Meta, Facebook's parent, ranks as NVIDIA's second-largest customer after Microsoft (MSFT.US).

NVIDIA now eyes its eighth consecutive weekly gain. Its $1.9 trillion market-cap surge since April's low eclipses Meta's entire valuation. With a $4.2 trillion capitalization, NVIDIA solidifies its global corporate leadership—$400 billion ahead of runner-up Microsoft.

"The momentum train keeps rolling. Positive catalysts trigger instant buyer stampedes," remarked James Abate, Horizon Investments' Managing Director. Yet Abate has partially cashed out, citing valuation concerns and underestimated "AI's looming cyclical swings." NVIDIA's 34x forward P/E, while up from April's 20x low, stays below its five-year 40x average.

Most Wall Street firms remain bullish amid strengthening AI demand signals—including TSMC's (TSM.US) robust Thursday outlook. Of 79 covering analysts, just one issues a "sell" rating versus nine "neutrals."

Investors now scrutinize impending tech giant earnings for capital-expenditure clues. Alphabet (GOOGL.US) reports July 23, followed by Microsoft and Meta on July 30. Together with Amazon (AMZN.US), these firms drive over 40% of NVIDIA's revenue before its late-August earnings release.

Wayve Capital Management's Rhys Williams advocates holding firm: "NVIDIA has achieved decisive breakout. We anticipate stellar quarterly results and raised guidance, with data-center growth sustaining strength for 12-24 months."