Nvidia’s Stock Journey: A Year of Ups and Downs

Nvidia’s stock has seen quite the rollercoaster this year, starting with a significant drop of 31% before rebounding with an impressive 84% increase since hitting a low in April.

Sam Pierson, a research director at S3 Partners, has identified a potentially effective way to take advantage of this volatility. He suggests monitoring specific metrics that could signal promising profits ahead. This method involves calculating a long-term ratio, which compares a sustained interest in a stock against a shorter-term interest. His latest research indicates that Nvidia’s stock price tends to rise in the months following notable increases in these ratios.

To be more precise, when this ratio spikes to a six-month moving average of 1.5 standard deviations, Nvidia’s price jumps by about 11% the following month. This increase is nearly double the typical monthly gain of around 6%. In fact, in the three months after such a signal, Nvidia often yields a return of 28%, compared to the usual 19%.

The analysis revealed that the stock has achieved an incredible 86% return in the month following readings that exceeded the 1.5 standard deviation threshold. Interestingly, on the rare occasions that losses occurred during these periods, they were limited to an average drop of just 1%.

Based on these insights, Pierson referred to the long-term ratio as “a powerful short-term tool.”

He also mentioned a chart illustrating the returns, with highlights showing times when the ratio peaked at least at 1.5. Presently, the ratio sits below this threshold, primarily due to a recent decline in the shorter position ratio to 15.4.

This analytical model has shown consistent validity throughout the year.

Pierson noted that since the beginning of 2025, the long-term signal has remained effective. Throughout 46 instances where thresholds were met, Nvidia provided an average forward return of +7% over one month with a solid 76% success rate.

Additionally, he observed that Nvidia’s long-term busy period in 2025 nearly doubled its forward return for the month when compared to baseline figures.

Shares of Nvidia dipped roughly 10 days after a warning about slowing growth during a recent quarterly revenue call, leading to a 6.5% decline since August 26.

Despite this, investors still favor Nvidia stocks. According to Interactive Brokers, Nvidia was the most bought stock, registering 234,628 purchase orders over the past five days.

“Our customers are indeed quite loyal. Nvidia has brought substantial success to many investors, and despite the somewhat disappointing revenue they’ve reported, it’s clear they aren’t ready to abandon it,” stated Steve Sosnick, Chief Strategist at Interactive Brokers, in an email.

Sosnick added that Nvidia not only topped their platform’s activity but also surpassed last week’s surprise leader, while comprising less than a third of overall net purchasing activities among the stocks listed.