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Nvidia (NVDA) shares approached the 50-day moving average on Wednesday. On Tuesday, shares rose to regain the 21-day exponential moving average news that China-based Huawei Technologies is testing an advanced artificial intelligence chip similar to Nvidia’s H100.
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Nvidia dominates the AI game. Can it continue?
Nvidia is facing US sanctions as it exports its advanced data center chip to China. According to the report, Huawei’s chip, the 910C, could face hurdles from further US sanctions on machine parts.
Nvidia shares have recovered from a psychologically important level of 100. That could tempt investors to buy back the shares. Emotions can quickly come into play and turn decisions upside down. But check various technical measures and map readings And proven trading rules increase the chances of success and help investors assess them whether Nvidia stock is a buy now.
Nvidia’s profit-driven run
Earnings have kept the stock moving in 2023 and 2024, and it’s a great testament to why fundamental performance is one of the pillars of the Investor’s Business Daily Methodology. In 2023, AI stock Nvidia had a massive 239% run. After losing ground in July and this month, the price is up just over 100% so far this year.
But fundamentals are only one of the four pillars of investing: the others are a stock’s technical strength, which indicates its performance relative to other stocks, its direction of the market And risk management.
As it heads into its second-quarter report later this month, Nvidia reports recent stock action contains a mix of good and bad. Meanwhile, recent market volatility makes risk management as important as timing stock selections.
Last Monday, the stock lost 6.4% amid a report that the AI chip was the leader will delay the next generation AI chip by at least three months due to a design error.
Reports from Reuters cited Bernstein analyst Stacy Rasgon’s view that the three-month delay would not make a significant dent in the chip leader’s market share. Furthermore, the demand-side outlook remains strong as “all the major hyperscalers” increase their investment plans to help grow their cloud computing and data processing capabilities.
IBD MarketSurge’s weekly chart shows that the stock lost 29% of its value in four weeks stock performance versus the S&P 500 past.
In early August, shares fell after reports that the Justice Department is investigating the acquisition of Run.ai, an artificial intelligence startup. The company’s practices in selling multiple AI chips to cloud providers are also examined.
After losing its position on the 50-day moving average more than two weeks ago, Nvidia is now 3% below that level.
The demand for AI chips is increasing
Good news came from Metaplatforms (META) as the AI spending plans further boosted the AI chip leader. Meta is a major customer of Nvidia AI chips. According to reports from CNBCMeta plans to have 350,000 Nvidia H100 graphics cards installed by the end of the year.
In June, Nvidia said it was planning to do so deploying its most advanced artificial intelligence platform in 2026. The AI chip leader will also use next-generation memory to improve processing time.
Also early June Foxconn announced its construction plans an advanced computing center in Taiwan that uses Nvidia’s Blackwell chips. Nvidia partners with Foxconn building data centers to expand in autonomous driving and the electric vehicle market. Although Tesla uses Nvidia’s chips, it plans to custom build them internally in the future.
Nvidia stock split
Share trading began on June 1 on a split-adjusted basis.
But the split could go further than just lowering the price of each share. A lower price would make Nvidia a candidate for the Dow 30, a price-weighted index.
Previously, Apple (AAPL) And Amazon.com (AMZN) joined the Dow Jones after the stock split.
The stock split will give further boost to the AI chip leader and present what one analyst calls a “generation of purchasing opportunities.”
Nvidia Stock: First Quarter Results Shine
Second quarter results are expected on August 28.
Shares of Nvidia soared to record highs after its fiscal first quarter results again beat expectations on May 22. Revenue grew 262% to $26 billion, while earnings of $6.12 per share were 461% higher.
The AI leader has also teamed up with Microsoft to develop the latest AI software available on Nvidia graphics processing units.
Nvidia previously shares rose past a handle buy point after the Google AI conference showed several ways artificial intelligence will improve search. The search giant also previewed an Android feature that alerts users to scams during a phone call. While Google’s tensor processing units are rivals to Nvidia’s chips, Nvidia dominates the market for AI chips in data centers.
Nvidia shares are worth Accumulation/distribution assessment of E on a scale of A+ to E. That reflects the heavy institutional selling in recent weeks.
AI products drive growth
Nvidia has a reputation as a pioneer. The company was an early pioneer of graphics processors that many say dramatically improved computer gaming. In addition to gaming, Nvidia chips are now used in industries such as healthcare, automotive and robotics.
In March 2023, generative AI took a leap forward with OpenAI’s ChatGPT. According to Nvidia CEO Jensen Huang, Nvidia’s AI-enabled supercomputer has paved the way for the “iPhone moment of AI.”
That helped Nvidia turn the tide of results. In late 2022 and early 2023, the company reported three quarters of declining year-over-year sales and four quarters of declining profits. But then the company achieved both top- and bottom-line growth in the two most recent quarters.
Total global revenues from AI chips will grow by 26%, from $53.4 billion in 2023 to $67.1 billion in 2024. recent report from research agency Gartner. This is expected to double to $119 billion by 2027.
Nvidia’s graphics processing units help accelerate computing in data centers and AI applications.
Top ratings for Nvidia stock
Nvidia stock still has a strong 98 Relative strength rating. The EPS rating is an ideal 99, while the shares are a Composite review of 98.
Nvidia is also one of the Magnificent Seven stocks that led the pack in 2023 and much of this year. Some of these tech titans are customers who rely on Nvidia’s cutting-edge chips. Nvidia is also one of the stocks that many analysts believe in will outperform the market in 2024.
Is Nvidia Stock a Buy?
Chart patterns are a good way to determine when to buy or sell a stock. Nvidia’s chart shows that the stock is operating on a basis with a possible buy point at 136.15, according to IBD market wave. Look out for previous entries on the 50-day line or trendline data after the stock reaches that level.
It is now best to wait until the stock reaches the 50-day line again and build a new base to make an initial purchase of the AI chip stock. Moreover, institutional support could use improvement relative force line starts to recover. The stock is currently not a buy.
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