Rolls Royce share price momentum has been strong in the last month, gaining nearly 12% during that period. However, the stock was down by 0.4% at the time of writing, reflecting the broader market sentiment following Moody’s downgrade of the United States. The stock has been on a strong upside in recent days, riding on the momentum created by the US-UK trade deal.
A Case for Rolls Royce Uptrend
The company’s market capitalisation rose to record-highs of £69.1 billion on Thursday, after its share price rose to all-time highs of 816p. Based on its current sentiment, its near-term and medium-term momentum favours it to stay on the upward trajectory. Rolls Royce’s (LSE: RR.) growth is primarily hinged on strong growth in civil aviation and increased defence spending amid increasing geopolitical crises.
In addition, the Small Modular Reactor (SMR) nuclear energy technology holds much promise as the next big growth frontier. As AI adoption grows, major tech companies have raised their capex on data centres, allocating tens of billions of dollars.
According to International Energy Agency (IEA) data centre energy demand is estimated to more than double to 945 TWh by 2030, primarily driven by AI. That will likely translate to more growth headroom for Rolls Royce SMR business. However, its high P/E ratio of 27 is an underlying warning sign pointing to a potential overvaluation and leaving little room for error.
Rolls Royce Share Price Prediction
Rolls Royce share price momentum calls for control by the buyers above 803p. The upside will meet initial resistance at 811p. However, a stronger upward momentum will break above that level and could potentially extend gains to test 818p. Conversely, going below 803p will favour the sellers to take control. Such momentum will likely find its initial support at 798p. The upside narrative will be invalid below that level. In addition, an extended control by the sellers could push the Rolls Royce share price lower and test 792p.
