Retreats can be tempting. NVIDIA (NVDA) fell well below its 50-day moving average on Tuesday. Volume was 17% above average. Shares fell 6.4% on Thursday after the release of earnings, even though the AI chip leader beat analyst estimates. But should you buy or sell Nvidia stock now?
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How Nvidia is bringing AI to the healthcare industry
Timing your stock purchases can certainly boost profits. But even with an obvious market leader like Nvidiait is not easy to say whether you Buy or sell the stock nowBut chart signals and checking various technical indicators can help investors assess whether it is worth buying Nvidia stock now.
Nvidia’s second quarter results
On Wednesday, Nvidia reported earnings that beat Wall Street expectations. Revenue of $30.04 billion was higher than the $28.7 billion expected by analysts and was 122% higher than the year-ago quarter. Earnings of 68 cents per share also beat expectations of 65 cents and were 152% higher than the year-ago quarter. The artificial intelligence chip leader also forecast higher revenue for the current quarter of $32.5 billion versus expectations of $31.7 billion.
The stock recovered above the 50-day moving average on Friday morning, but was back below it by the end of the trading day. The ongoing market volatility makes Risk management just as important as the timing of stock selection. Rally confirmation August 13 reduced the risk for equity investors, the technology-dominated Nasdaq fell below the 50-day average on Thursday and added a Distribution day.
After losing 8% last week, Nvidia stock is in a choppy base below the 50-day moving average and its split-adjusted all-time high of 140.76 is the next Buying point.
On Monday of last week, the stock briefly broke above a trendline entry at 130.75. Trendline entries can allow investors to buy earlier, but they are also more aggressive entries, especially before earnings are released.
After the results announcement, the share remains below this level.
Nvidia’s profit growth
Earnings have moved the stock in 2023 and 2024, and that is a shining example of why Basic performance is one of the pillars of the Investor’s Business Daily methodology. In 2023, Nvidia saw a huge increase of 239%.
After losing 5.3% in July, the stock rose 2% in August. It is up just over 120% so far this year.
Fundamentals are just one of four IBD pillars of investing – the others are a stock’s technical strength, which indicates the stock’s performance relative to other stocks that Market direction and risk management.
In early August, the stock plummeted when it was announced that Nvidia will delay its next-generation AI chip by at least three months due to a design defect. Nvidia’s diagram also shows that the Shares lagged behind the S&P 500 during the sale.
Reports from Reuters cited Bernstein analyst Stacy Rasgon’s opinion that the three-month delay would not significantly affect the chip leader’s market share. In addition, the outlook on the demand side remains good, with “all major hyperscalers” increasing their investment plans to improve their cloud computing and data processing capabilities.
Shares also fell after reports that the Justice Department is investigating the acquisition of Run.ai, an artificial intelligence startup. The company’s practices of selling multiple AI chips to cloud providers are also under scrutiny.
Good news came from Meta-platforms (META), however, as its AI spending plans gave Nvidia another boost. Meta is a big customer of Nvidia’s AI chips. According to Reports from CNBCMeta plans to install 350,000 Nvidia H100 graphics cards by the end of the year.
Nvidia shares: Microsoft partnership
The AI market leader has also partnered with Microsoft to latest AI software available on Nvidia graphics processors.
In May Nvidia shares rose above a handle buy point after the Google AI Conference showcased several ways artificial intelligence will improve search. The search giant also unveiled an Android feature that warns users about fraud during a phone call. While Google’s tensor processing units are competitors to Nvidia’s chips, Nvidia dominates the market for data center AI chips.
Nvidia shares hold a Accumulation/Distribution Rating of E on a scale of A+ to E. This reflects the strong institutional selling of the last few weeks.
AI products drive growth
Nvidia’s graphics processors accelerate computing power in data centers and AI applications. The company was an early pioneer in graphics processors, which many believe have 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 major leap forward with OpenAI’s ChatGPT. According to Nvidia CEO Jensen Huang, Nvidia’s AI-enabled supercomputer paved the way for the “iPhone moment of AI.”
This helped Nvidia turn the tide on its results. In late 2022 and early 2023, the company reported three quarters of declining year-over-year revenue and four quarters of declining profits. But then the company delivered record revenue and profit growth in the last two quarters.
Top ratings for Nvidia shares
Nvidia shares continue to show a strong 98 Relative Strength Rating. The EPS valuation is an ideal 99, while the stock has a Composite rating of 95.
Nvidia is also one of the Magnificent Seven stocks that led the stock in 2023 and much of this year. Some of these tech titans are customers that rely on Nvidia’s advanced chips. Nvidia is also one of the stocks that many analysts believe will outperform the market in 2024.
Is Nvidia stock a buy?
Chart patterns are a good way to determine the right time to buy or sell a stock.
Nvidia fell under its 50-day average in higher volume on Tuesday. This is a sell signal. The stock needs to reclaim this level and expand its base before it becomes a buy.
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