The name to watch this week is definitely Nvidia. Last week, the club’s name was dropped after the disaster was reported. Early Tuesday, it was looking to bounce back from Friday’s closing price of $215 before coming under pressure. Why is it important? We know the fundamentals of the AI chip powerhouse are as strong as ever. If there is a pullback early this week, the technical setup could move in our favor. A low closing price may signal the opposite. Looking at Nvidia’s chart, it has overcome resistance in the $210-$215 area, which was rejected twice by sellers over the past year. The first time dates back to October 2025, when the stock peaked at $212.19, and the second time in late April, when the stock peaked at $216.83. The stock recently broke through, trading to an all-time high of $236.54 on May 14, less than a week before earnings. According to the principle of polarity in technical analysis, this should have turned the old resistance level at $215 into a new support level. However, shortly after hitting a record high, NVIDIA stock had already fallen back, and the decline accelerated after the news. The principle of polarity holds that once support is broken, it becomes resistance. That is why the drop to $215 is so significant. Because if it falls significantly, the currently expected support level will break and become resistance again. Then it will return to the stubborn levels of late April. NVDA YTD Mountain Nvidia YTD A higher Nvidia closing price on Tuesday could signal that the stock is poised to consolidate the next bull run. But if it fails to move forward, the plan laid out by Jim Cramer in his weekly column may be the only thing management can do to try to get the stock back on track. Jim writes that Nvidia should consider a page in Apple’s cash return strategy to shareholders. You probably know that Apple has returned nearly all of its excess cash to shareholders over the past decade, reducing its stock float by more than a third. Reducing the number of shares increases an investor’s ownership of the company without the investor taking any action. When the supply of a stock decreases, its price tends to rise as well. Apple’s stock price has increased 1,140% over the past 10 years. Given the lack of an Apple-style cash return model, and the high premiums Nvidia’s options traders are willing to sell on top to lock in the stock price, Jim said they may need to consider reducing their position size in Nvidia. To be clear, this does not mean that we are considering withdrawal. We have no intention of abandoning the incredible value these stocks represent, especially when earnings are still growing rapidly and all signs point to sustained demand. There’s an old saying on Wall Street from engineer Ned Davis: In his book “Being Right or Making Money,” Davis recounts a story from a senior trader who asked him point-blank, “Do you want to be right or do you want to make money?” Why is it applicable here? From the numbers to the story to the technology to customer demand to the supply chain, we know NVIDIA is right. There’s no question that Nvidia is undervalued. Considering the trading prices of its peers, it is significantly undervalued. But Nvidia hasn’t been making much money lately. As Jim wrote in his column, this is a “what have you done for me lately” story, but Nvidia stock hasn’t had much impact lately. It is true that the stock has moved from the March 30 closing price of $165 to over $236 since the beginning of the year, but it has now returned to the level it was in April. Look, we’re almost back to October 2025. So if it doesn’t work out right away, consider that you’ve already paid too much in opportunity cost and may need to scale back a bit to reallocate that cash elsewhere. Granted, we continue to believe this stock should be held for some time over the long term, but the fundamentals may force a tough call soon. (Jim Cramer’s charitable trust is long NVDA, AAPL. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
