It appears there’s Nvidia and then there’s the rest. But those who still hold the stock should be asking themselves: What is an exit strategy as Nvidia struggles to get past the 900 level? Stock news and earnings reports can trigger big moves, but sometimes, those moves may come just as part of a stock’s normal chart action.
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Meanwhile there are plenty others watching from the sidelines, waiting for a chance to buy. The fear of missing out is a powerful emotion and can lead to poor decisions. All this begs the question, is Nvidia a buy now?
Though buying and selling are personal decisions, chart tools are trusty aids. But market conditions can change quickly, and reading an overview of the market action and recommended exposure levels can take the emotion out of investing decisions.
Meanwhile, Nvidia (NVDA) continued its battle to get past the 900 level yet again on Thursday. On Wednesday, shares closed below it after news of an earthquake in Taiwan that disrupted operations for its foundry partner, Taiwan Semiconductor (TSM).
The stock appears to be hitting resistance around 900 after its massive rally. That is denting its relative performance when compared with the S&P 500. Nvidia’s chart shows that the relative strength line, which compares stock performance to the S&P 500, is flattening. In previous instances when Nvidia’s line flattened out, the stock formed a base.
Analysis tools on IBD MarketSurge show that Nvidia stock is stretched well above the 50-day moving average, suggesting a pullback is due.
Shares remain extended even after the AI leader broke an 11-week win streak last week. The run began when Nvidia shares broke out in January from a buy point of 505.48.
In late March, shares got a boost as the Nvidia GTC conference for AI developers took place. That was after a huge run of 239% in the stock in 2023. The stock is up 80% so far this year.
Chief Executive Jensen Huang discussed the artificial intelligence leader’s new chip, Blackwell, at the company’s recent AI developer conference. The new AI chip will accelerate computing and will be available through several Nvidia partners later in the year.
Analysts Increase Price Targets After GTC Conference
After the March conference, UBS analyst Timothy Arcuri increased Nvidia’s target price to 1,100 from 800 while maintaining a buy rating.
Arcuri said that following the Blackwell launch, “we believe Nvidia sits on the cusp of an entirely new wave of demand from global enterprises and sovereigns — with each sovereign potentially as big as a large U.S. cloud customer.”
Ahead of the conference, Truist analyst William Stein raised Nvidia’s price target to 1,177 from 911. He sees stronger demand in 2024 and 2025 for Nvidia’s chips. Analysts at HSBC also increased their price target, going to 1,050 from 880. Both Truist and HSBC maintained a buy rating on the stock.
Analysts at Bank of America also recently raised their price target, going to 1,100 from 925.
Nvidia Stock: A Beat-And-Raise Fourth Quarter
Nvidia delivered yet another beat-and-raise quarter in February. Earnings per share of $5.16 on sales of $22.1 billion beat fourth-quarter views of $4.59 and $20.4 billion, respectively.
Earlier, the company said the limited supply of AI chips was the biggest challenge to growth. Customers may also wait for the next-generation B100 chip that is expected in the coming quarters. Baird analysts recently said this was a good thing. B100 chips will have better performance and will likely have a higher average selling price, analysts said.
The maker of AI chips also disclosed its recent stakes in several smaller AI plays in a filing with the Securities and Exchange Commission.
Also in February, Chief Executive Jensen Huang gave a rosy outlook for data center spending — a key segment for Nvidia. At the World Government Summit in Dubai, Huang said that “over the course of the next four or five years we’ll have $2 trillion worth of data centers that will be powering software around the world, and all of it’s going to be accelerated.”
Huang added that countries can now “create computing technologies that nobody has to program.”
He added: “Everybody in the world is now a programmer.”
Nvidia Stock Forms Base After Blockbuster Q3 Results
Nvidia’s current stock move traces back to late 2023. At that time, shares broke out of a double-bottom base with a buy point of 476.09 in strong volume ahead of third-quarter results in November.
A week before reporting the results, Nvidia announced at the SC23 supercomputing conference in Denver a new artificial intelligence computing platform and an advanced data-center chip.
Despite a blockbuster quarter, shares fell after the earnings report but found support at the 50-day moving average. That allowed the stock to form a flat base with a buy point of 505.48. The company said profits came in at $4.02 a share. That came on sales of $18.12 billion for the period ended Oct. 29. Analysts polled by FactSet had expected earnings of $3.37 a share on sales of $16.19 billion.
Compared with the year-ago quarter, Nvidia earnings soared 593%, while sales saw a 206% spike.
Demand from data centers was the chief reason. Nvidia’s data-center sales jumped 279% from the year-earlier period to a record $14.51 billion. Data-center sales also increased 41% from the second quarter.
AI Products Drive Growth
Nvidia has earned a reputation for being a trailblazer. The company was an early pioneer in the graphics processors that many say drastically improved computer gaming. Along with gaming, Nvidia chips now are used in such industries as health care, automobiles and robotics.
In March 2023, generative AI took a leap with OpenAI’s ChatGPT. According to the company, Nvidia’s AI-capable supercomputer paved the way for the “iPhone moment of AI.”
That helped Nvidia turn the tide on its results. It reported three quarters of declining year-over-year sales and four quarters of tapering earnings. But then the company achieved record top- and bottom-line growth in the two most recent quarters.
Top Ratings For Nvidia
Nvidia stock shows exceptional technical strength and boasts a best-possible score of 99 on both its Composite Rating and EPS Rating. Its Relative Strength Rating of 98 also shows that it outperforms the vast majority of stocks in the Investor’s Business Daily database.
Nvidia also is one of the Magnificent Seven stocks that led the 2023 stock rally. The other stocks are Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Tesla (TSLA) and Amazon (AMZN). Some of these tech titans are customers that rely on Nvidia’s advanced chips. Nvidia is also one of the “Magnificent Seven of 2024.”
Nvidia stock currently ranks first in the fabless semiconductor group, which holds 5th place among IBD’s 197 industry groups. The AI stock frequently appears on the IBD 50, IBD Sector Leaders and Tech Leaders lists. Further, the stock is on IBD Leaderboard.
Is Nvidia A Stock A Buy?
The stock holds an Accumulation/Distribution Rating of B. That shows strong interest among institutional buyers over the last 13 weeks.
Overall worldwide AI chip revenue will grow 26% from $53.4 billion in 2023 to $67.1 billion in 2024, according to a recent report from research firm Gartner. That is set to double by 2027 to $119 billion
Nvidia’s graphic processing units help accelerate computing in data centers and AI applications.
Nvidia stock is not a buy right now. Shares are extended from a buy zone that originated from a flat base’s 505.48 entry.
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