Nvidia’s latest partnership with Synopsys, a lesser-known company, led to a $2 billion stock purchase. Synopsys, a long-standing player in the tech industry, boasts over $6 billion in annual revenue and a market cap exceeding $75 billion. Despite lagging in the tech sector, the stock shows signs of a potential turnaround.

Synopsys, trading at 43x trailing earnings, received a boost from the NVDA deal. With the stock price bouncing back after a significant decline, technical indicators suggest a possible reversal in momentum. However, a longer-term bearish outlook remains a concern, making SNPS a candidate for protective strategies like a collar.

NVDA’s history of strategic partnerships prompts speculation about the creation of an ETF comprising companies in its web of deals. In the AI-driven economy, it’s crucial to assess both the potential gains and risks associated with such collaborations. As investors navigate the evolving tech landscape, proactive risk management strategies are essential to capitalize on opportunities while safeguarding against potential downturns.

Read more at Barchart: Nvidia Just Lit a Fire Under Synopsys Stock But Its Chart Is Waving Red Flags. Here’s the Only Way I’d Trade SNPS Here.