SQSP's Big Base Breakout Signals Gains, Nvidia Fuels AI Optimism

Key Takeaway

• Squarespace Inc. (SQSP) exhibits a "big base breakout" with its stock retesting April highs and an upward 2024 guidance revision, signaling potential gains.
• Nvidia's 210% share price surge boosts global AI stocks and cryptocurrency tokens, indicating market optimism ahead of its Q1 earnings report.
• The anticipated "AI super cycle" and the transformative potential of AI technology fuel bullish outlooks for AI-related investments.

Squarespace's Technical Breakout

Squarespace Inc. (SQSP) has caught the attention of investors as it retests its April high, following an upward revision in its 2024 guidance. This move is part of what appears to be a "big base breakout" pattern on the weekly chart, suggesting potential for significant gains in the months ahead. After its IPO in May 2021 at $50, Squarespace's stock reached a peak of around $65 before entering a downtrend, bottoming out at approximately $14.40 in May 2022. The stock's recovery to around $33 by April 2023, aligning with a 38.2% Fibonacci retracement of the 2021-2022 selloff, marked a critical resistance level. This level was consistently tested through 2023 and into early 2024, eventually breaking above in March of this year, turning the $33.70 resistance into support.

Nvidia's Surge and AI Market Optimism

Nvidia's remarkable 210% share price increase has had a ripple effect, boosting global AI stocks and cryptocurrency tokens focused on AI. European semiconductor stocks such as ASML, VAT Group, ASM International, and BE Semiconductor have seen gains between 40% and 85%, showing a positive correlation with Nvidia's performance. This trend underscores the broader market optimism surrounding the AI sector, particularly ahead of Nvidia's Q1 earnings report. The anticipation of an "AI super cycle," spurred by developments like the launch of new AI technologies, has further fueled this optimism. AI-focused cryptocurrency tokens have also rallied, outperforming the broader market and Bitcoin, indicating a strong belief in AI's transformative potential.

Market Dynamics and AI's Transformative Potential

The correlation between Nvidia's stock performance and that of European semiconductor companies highlights the interconnected nature of the global tech industry, especially within the AI and semiconductor sectors. The surge in AI-focused cryptocurrency tokens, alongside Nvidia's stock, ahead of its earnings report, reflects market anticipation of continued growth and innovation in AI technology. The concept of an "AI super cycle," driven by new AI developments and the transformative potential of AI technology, has captured the market's imagination, suggesting a bullish outlook for AI-related investments.

Street Views

• David Keller, CMT (Bullish on Squarespace Inc.):

  "The broader the base, the higher in space... that would imply a minimum upside objective around $41, a level not seen since November 2021."