nvidia (NVDA), a giant in data centers and games, is still rocking. Wall Street analysts battered the AI chip leader’s schedule ahead of its earnings report tomorrow. Is Nvidia Stock a Buy After Tuesday’s Bearish Reversal?
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Semiconductors, AI News
Nvidia is set to report its second-quarter financial results on Wednesday, after the market closes. After strong results and AI-assisted guidance in the prior quarter, expectations are very high.
On August 21, analysts at KeyBanc, HSBC and BMO Capital raised price targets on Nvidia shares ahead of its earnings report. In fact, more than a dozen Wall Street firms have raised price targets since the beginning of last week, according to FactSet.
Wedbush analyst Dan Ives wrote in an Aug. 20 note to clients that he expects a bullish outlook from the chip giant. The analyst expects a “tidal wave” of AI spending, which he believes is real and transformative, rather than hype.
However, with big tech selling off, Ives says Wall Street is focusing on Nvidia’s guidance for assessing the “real demand and growth trajectory” for AI (artificial intelligence) for the rest of 2023 and 2024.
Earlier in August, Nvidia unveiled its next-generation super AI chip: the GH200, which will be released next year.
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 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 8.5% on August 21st. The big chip stock rebounded from the 50-day moving average as well as the 21-day exponential moving average.
Nvidia stock broke the short-term trend line and also crossed the short-term high of 452.68. Under normal circumstances, any of these movements would be an early buy point. But the upcoming earnings make buying very risky, and the “correction” situation in the stock market makes buying, for the time being, off the table.
On Aug. 22, NVDA fell 2.8%, ending near the session lows after rising to a record high for the day. The ugly reversal highlighted the risks of earnings volatility, especially for a big winner like Nvidia.
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The broader market is struggling to recover from the sell-off, including many other leading chip and AI companies. Nvidia has mostly held up better than growth stocks in general.
The RSI line rose to high levels along with the stock, 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.
Prestigious nvda affiliate IBD Leaderboard In February on a profit gap. It jumped back in May on huge earnings and strong guidance.
So far, Nvidia stock has more than tripled in 2023, after crashing in 2022.
NVDA earns money IBD composite classification out of 96, out of the best possible 99. In other words, Nvidia stock is in the top 4% 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 defect 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 69 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 now expect Nvidia’s profit to rebound by 148% as sales jumped 65%. Last year, Nvidia’s earnings fell 25% per share.
Of the 50 analysts covering NVDA stock, 43 rate it Buy. According to FactSet, six are for title and one is for sale.
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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 did a job A big boost in metaverse apps.
Fabless chips stock included Qualcomm (QCOM), Broadcom (AVGO) And Harmonious energy systems (MPWR).
Currently, fabless ranks #30 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 uncertainty and the risk of a global recession remain.
NVDA stock has made a massive comeback, tripling in 2023 so far. The stock is in a buying range from its latest breach. But the AI leader’s earnings on Wednesday and general market conditions are factors to consider before making any new or additional purchase.
Bottom line: Nvidia stock is a buy right now, but only from a purely technical standpoint. Risk of negative earnings reaction, market corrective advisor against new buys.
As a chipset company with exposure to the largest developing markets, Nvidia is always something to watch.
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