Mon. Jul 15th, 2024
Nvidia Stock Soars Again After Massive AI-Powered Rally - Is It a Buy?

nvidia (NVDA), a giant in data centers and games, is still rocking. The chip giant is seen as one of the biggest winners in the AI ​​boom. Is Nvidia stock a buy now, with dividends due next week?


Semiconductors, AI News

On Aug. 14, Morgan Stanley analysts said Nvidia remains the top pick among chip stocks ahead of its earnings report. They see a “massive shift” in spending towards AI (artificial intelligence) and demand for AI chips outstrips supply.

Other analysts bombarded Nvidia’s schedule ahead of upcoming earnings.

Earlier in August, Nvidia unveiled an even more powerful AI chip coming next year: the next-generation GH200. and the financial times It reported that Chinese internet giants are rushing to get high-performance Nvidia AI chips, placing orders worth $5 billion.

Nvidia is exploiting the emerging market for generative AI. Generative AI can generate content, including written articles, from simple phrases by analyzing huge amounts of data. He can also write computer programming code.

For those looking for the biggest big-cap stocks to buy now, here’s an overview of the leading AI company.

Nvidia stock technical analysis

Nvidia shares rose 2% on Aug. 15, rallying for the second day in a row. The chip stock rose 7% on Aug. 14, retaking the 50-day streak as Morgan Stanley called it a top pick. Both gains came in higher volume.

Nvidia stock has cleared the 21-day line and is on the short-term trend line. Investors can use the August 15th high of 542.68 as a specific buy point, and it is still fairly close to the 50-day line.

Investors should keep in mind that Nvidia is increasingly standing alone. The broader market continues to sell off, including several other leading chip and AI companies. Moreover, the upcoming earnings report increases the stakes.

NVDA joined the prestigious IBD Leaderboard in February with a huge profit margin. It jumped back in May on huge earnings and strong guidance.

Year-to-date, Nvidia stock is up nearly 205%, after crashing in 2022. The chip stock hit a 52-week high on July 14.

The RSI line is not far from the recent highs, IBD MarketSmith charts show. The rising RS line means that the stock is outperforming the S&P 500. It is the blue line in the shown chart.

NVDA earns money IBD composite classification Out of 95, out of the best possible 99. In other words, Nvidia stock is in the top 5% of all stocks in terms of technical and fundamental metrics.

Investors should generally focus on stocks with composite valuations of 90 or even 95 and above. Nvidia stocks often gain a place in the IBD 50And Big Cap 20 And sector leaders lists.

the IBD stock check The tool states that NVDA has a relative strength rating of 99. This means that it has outperformed 99% of all other stocks over the past year.

the iShares PHLX Semiconductor Box (SOXX) holds both Nvidia shares and AMD shares.

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Nvidia earnings

nvidia EPS rating He is 68 of 99 and has SMR evaluation It is B, on a scale from worst A to E. The EPS rating compares the company’s earnings growth to other stocks. SMR measures sales growth, profit margins, and return on equity.

On May 24, the chip giant reported a big earnings increase. Nvidia’s earnings report included a bullish AI-powered sales forecast.

The Santa Clara, California-headquartered company earned $1.09 a share on sales of $7.19 billion in the quarter ended April 30. And on an annual basis, Nvidia’s profits are down 20% while sales are down 13%. But the results easily exceeded Wall Street’s expectations.

In the first quarter, data center sales increased 14% to $4.28 billion. Game chip sales fell 38% to $2.24 billion.

For the full year, analysts expect Nvidia’s earnings to rebound by 142%, with sales up 63%. Last year, Nvidia’s earnings fell 25% per share.

Its next quarterly report is due on August 23, after the market closes.

Of the 50 analysts covering NVDA stock, 43 rate it Buy. According to FactSet, six are for title and one is for sale.

Looking for the next big stock market winners? Get started with these three steps

NVDA Backstory, Rivals

Chipset maker fabless created graphics processing units, or GPUs, to make video games more realistic. It’s expanding into artificial intelligence chips used in supercomputers, data centers, and drug development.

Nvidia GPUs act as accelerators for CPUs, or CPUs, made by other companies. They run on “supercomputers” that combine their own CPUs and GPUs.

In addition, Nvidia chips are used in bitcoin mining and self-driving electric cars.

Nvidia made a file A big boost in metaverse apps.

Fabless chips stock included Qualcomm (QCOM), from Broadcom (AVGO) And Harmonious energy systems (MPWR).

Currently, fabless ranks #16 out of 197 industry groups. Fabless companies design devices while outsourcing manufacturing to an outside company.

To get the best returns, investors should focus on Companies that lead the market and their own industrial group.

Would you buy Nvidia stock?

On a fundamental level, Nvidia’s earnings are expected to return to growth. It should more than double this fiscal year, driven by booming chip sales for data centers and artificial intelligence.

The fabless chip company is expanding into other growth areas like automated electric cars and cloud gaming as well. The adoption of the metaverse and cryptocurrency could drive up the demand for Nvidia chips.

However, macroeconomic uncertainties and the risk of a global recession remain.

NVDA stock has made a massive comeback, tripling in 2023 so far. Stocks shrugged off entering a new trend line after restoring key technical levels. The upcoming AI chip leader report and general market conditions are factors to consider before making any new purchase or installation.

Bottom line: Nvidia stock isn’t a buy right now, but it’s close.

As a chipset company with exposure to the largest developing markets, Nvidia is always something to watch.

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