Nvidia (NVDA) Stock Reaches All-Time High With Earnings Due — Is it a Good Investment?

Investor interest in artificial intelligence is skyrocketing because to data center and gaming behemoth Nvidia (NVDA). Next week, Nvidia reports profits; is it a good time to invest?

 

 

Breaking News: Semiconductor and AI

 

 

The latest graphics processing unit (GPU) from Nvidia, the much-anticipated H200, was introduced on November 13th. It is designed to train AI models. Supposedly, a new line of artificial intelligence chips tailored to Chinese consumers would be announced by the corporation soon. The chips allegedly met the requirements of the recently enacted export limitations imposed by the United States government. Nvidia might have lost $5 billion in sales if the restrictions had gone into effect.

 

In an effort to compete with Nvidia’s chips, Microsoft (MSFT) unveiled a bespoke AI chip on November 15th. According to analysts, on Tuesday’s results call, Nvidia may address worries regarding artificial intelligence competition and China.

 

Market leaders in generative AI, such as Nvidia and Microsoft, are capitalizing on this trend. By sifting through mountains of data, generative AI may produce complex pieces of content, such as articles, from relatively simple terms. Plus, it has the ability to write code.

 

Take a look at NVDA if you’re seeking the best large-cap stocks to invest in right now.

 

 

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Technical Analysis of Nvidia Stock

 

 

On Monday, Nvidia shares soared over the buy zone, which reaches 499.89. The intraday price of Nvidia shares reached a new record high. In November, NVDA stock broke through a double-bottom foundation and surpassed a 476.09 purchase price, as reported by IBD Leaderboard.

 

Although volume was a problem in the most recent base, the IBD MarketSmith chart indicates that Nvidia climbed on November 9th with the biggest volume since the base started to develop.

 

A encouraging indicator is the fact that the relative strength line for Nvidia stock is gaining pace. When the RS line goes up, it indicates that the stock is doing better than the S&P 500. In the given chart, it may be seen as the blue line.

 

Stock in NVDA has increased by almost 240% so far this year, following a disastrous 2022. Even though it hit a five-month low in October, it fared better than growth stocks overall during the recent market sell-offs.

 

The stock market as a whole, including Nvidia, had a strong recovery in November.

 

After a huge earnings gap in February, Nvidia joined IBD Leaderboard. From May to August, it reached a record high, propelled by AI-driven earnings and outlook.

 

 

A perfect score of 99 on the IBD Composite was achieved by NVDA. Using both technical and fundamental indicators, Nvidia’s stock continues to rank in the top one percent of all equities.

 

 

In general, investors should prioritize firms that have Comp Ratings of 90 or higher. Several lists, including the IBD50, Big Cap20, and Sector Leaders, include Nvidia stock.

 

A Relative Strength Rating of 99 was recorded for NVDA by the IBD Stock Checkup program. Compared to all other equities, it has fared better than 99% in the last year.

 

Nvidia and AMD shares are held by the iShares PHLX Semiconductor ETF (SOXX).

 

 

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Profit for Nvidia

 

Nvidia has an SMR Rating of A and an EPS Rating of 93 out of 99 on a scale from A to E, the poorest possible score. An EPS rating is a measure of how a stock’s profits growth stacks up against the market. Its SMR Rating takes ROE, profit margin, and sales growth into account.

 

Sales during the third quarter, according to the chip giant, were $16 billion, an increase of 170%. Earnings for Nvidia’s second quarter increased by 429%, while sales increased by 101%.

 

Data center revenue for the Santa Clara, California-based corporation increased 171% in the second quarter. A100 and H100 artificial intelligence chips, which are essential for AI applications, are part of the data center business.

 

Sales at Nvidia’s data center division are expected to more than treble and fuel earnings growth when the company announces its third quarter results late Tuesday, according to analysts. Even though it’s dangerous to purchase growth stocks like Nvidia before quarterly earnings reports, you can reduce that risk by using an options approach.

 

With a predicted 105% increase in revenue for the full year, experts now see a 224% rebound in Nvidia’s earnings. Shares of Nvidia’s profit dropped 25% last year.

 

The stock has 49 buy recommendations out of 52 analysts that cover NVDA. According to FactSet, three hold positions while none have a sell.

 

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NVDA History, Competitors

 

The pioneering graphics processing units (GPUs) were developed by the fabless chipmaker to enhance the realism of video games. The application of AI in data centers, supercomputers, and pharmaceutical research is on the rise.

 

Nvidia’s graphics processing units (GPUs) supplement other firms’ CPUs. An internal development of “supercomputers” using its own central processing units and graphics processing units is continuing.

 

Bitcoin mining and autonomous electric vehicles also make use of Nvidia chips.

 

Metaverse apps have been heavily promoted by Nvidia.

 

Qualcomm (QCOM), Monolithic Power Systems (MPWR) and Broadcom (AVGO) are fabless chip stocks.

 

Out of 197 industry groupings, the fabless group is currently ranked 25th. Fabless businesses rely on outside vendors to handle production while they focus on hardware design.

 

Investors might maximize their returns by concentrating on market leaders and companies within their own industry.

 

 

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Is Nvidia (NVDA) a Good Investment?

 

 

Fundamentally, Nvidia is in a prime position for meteoric expansion. Sales of chips used in data centers and AI are expected to soar this fiscal year, more than tripling earnings.

 

The fabless chipmaker is also increasing its presence in other promising development sectors, such the metaverse, cloud gaming, and autonomous electric vehicles.

 

The threat of AI, however, is growing. Uncertainty persists at the macroeconomic level. War in Ukraine and Israel, as well as the ongoing trade war between the United States and China, pose significant geopolitical concerns.

 

So far in 2023, NVDA stock has more than tripled, indicating a massive recovery. However, shares are no longer in the purchase area because the recent breakthrough occurred beyond a double-bottom buy mark.

 

In conclusion, Nvidia stock is not a good investment at the moment. Never sleep on NVDA, a chipmaker with a foot in several promising emerging markets.

 

Hundreds of top stocks to watch or invest in can be found in IBD Stock Lists and other IBD publications.

 

 

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