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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

NYSE: Is the share price overhyped?

Technical outlook on’s share price within its current highly volatile environment.

Robot image Source: Bloomberg

Is the surge higher in the’s share price sustainable?

The Inc share has been part of the recent global Artificial Intelligence (AI) buying frenzy and has risen by more than 225% year-to-date, having previously dropped 94% from its December 2020 peak.

The share price is thus rather volatile, to say the least.

It dropped by 13% on 1 June, for example, when the artificial intelligence software developer reported fourth quarter results, beating expectations on the top and bottom lines but offering a forecast that disappointed analysts’ expectations.

Within a matter of a week the share price had not only recouped these losses but surged higher by nearly 30% despite some analysts being slightly worried about multiple revisions about what claim to be their customers.

Apparently some quarters wonder about whether the technology company’s CEO Tom Siebel is perhaps exaggerating not only the company's customer base but also revenue opportunities.

When faced with exceptionally high share price volatility, such as that of, it may make sense to trade shares with a technical rather than a fundamental approach. This way strict risk- and money management rules, such as using stop loss or even a stop and reverse orders, can be applied. analyst rating

Refintiv analyst recommendations Source: Refinitiv

Refinitiv data shows a consensus analyst rating of ‘hold’ for – 1 strong buy, 1 buy, 6 hold, 3 sell and 1 strong sell - with the median of estimates suggesting a long-term price target of $27.00 for the share, roughly 25% lower than the current price (as of 08 June 2023).

IG client sentiment Source: IG

IG sentiment data shows that 100% of clients have long positions which may point to over exuberance. Trading activity over this week and month shows 51% and 52% of sells respectively, though, but this could be due to profit taking. – technical view

The parabolic 157% rally in the share price from its early May lows, boosted by better-than-expected earnings by the likes of Nvidia, and a general market AI buying frenzy, seems to have run its course.

Unless Wednesday’s high at $39.33 is overcome on a daily chart closing basis, a lower high below last week’s seven-month high at $44.02, is in the process of being formed. It would indicate that cracks are beginning to appear in the share’s bullish picture. Daily Chart Daily Chart Source: Tradingview Daily Chart Source: Tradingview

A fall through Wednesday’s $35.30 low, made close to the $34.68 April peak, would likely lead to further selling taking the share price back down to last week’s low at $30.26 and lower still.

Even if a typical Elliott wave abc zig-zag correction were to be seen, the 55-day simple moving average (SMA) at $25.06 could be reached over the coming days, that is around 30% below the current price (as of 08 June 2023).

Given the recent high volatility in the share price, it is probable that another interim top will soon be formed, just as was the case in April. Weekly Chart Weekly Chart Source: Tradingview Weekly Chart Source: Tradingview

For this toppish view to become void, a rise above the late May high at $44.02 would need to be seen. Only then could the next higher November 2021 peak at $53.82 be in play.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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