Nvidia Stock Surges Near $6 Trillion as Short Sellers Bet Against Rally

Nvidia's stock continued its record-breaking rally, pushing its market capitalization close to $6 trillion, even as short sellers increased their bets against the company. On Monday, short sellers borrowed and sold 18.09 million shares, representing 14.23% of the day's trading volume, a significant jump from the average 10.13%. Despite the bearish sentiment, Nvidia's shares climbed another 1.5% to $242.37, extending a four-day winning streak.

Morgan Stanley reaffirmed its bullish stance on Nvidia, reinstating it as its top semiconductor pick with an overweight rating and a $300 price target. The analysts argued that the primary bottleneck in the industry is the speed of datacenter construction and financing, an area where Nvidia holds an advantage. They noted that while there is a shortage of power and space for semiconductors, Nvidia's strategy of gigawatt densification allows it to maximize efficiency in power-constrained environments.

The bullish momentum was further supported by a $150 billion share buyback program, the largest authorization of its kind, which the company announced on September 28. This move has encouraged investors, as exchange data showed a net inflow of $219.33 million on Monday, with large orders driving the buying. Additionally, Foxconn's revenue data for September, which rose 38.1% to NT$1.16 trillion, backed the strong demand for AI servers.

However, the growing bearish short interest, now at about 1.2% of the float, signals increasing skepticism. Technical indicators on the moomoo app are flashing bearish signals, with 11 of 15 commonly used indicators suggesting the stock is overbought. The relative strength index and KDJ momentum indicator also indicate fading momentum, raising concerns about a potential pullback. Despite these warnings, the stock remains above its support level of $212.80, with all holders currently in profit.