Nvidia drops below key level while SMCI dives; Is the stock a buy now? | Investor business daily

Nvidia may be the leader in the artificial intelligence chip group, but its fate may sometimes be tied to other AI games. That appears to be the case, as the Nvidia (NVDA) Shares then fell below the 50-day moving average Super microcomputer (SMCI) announced its first-quarter results on Wednesday.

Investors who own Nvidia might be wondering: Is it time to sell? Still, there are plenty waiting to buy the stock on a pullback. Panic selling and the fear of missing out can be powerful triggers that can lead to bad trades. Meanwhile, Nvidia’s earnings are looming.

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Chart patterns are good ways to determine when to buy or sell a stock. Although the stock is below its 50-day moving average, all may not be lost as Nvidia’s chart still shows a clear buy point from a basic basis, according to IBD market wave. Additionally, Wednesday’s selloff has lighter volume – a point in the stock’s favor.

Meanwhile, investors await Nvidia’s May 22 earnings report. If the stock rises on the back of earnings, a high volume breakout would be a buy signal.

On April 24, Nvidia entered into an agreement to purchase Run.ai. According to TechCrunchThe price tag is $700 million. Run.ai helps developers use AI tools more efficiently and reveals Nvidia’s roadmap and priorities. Run.ai works with Nvidia’s Cloud AI product that helps businesses “direct access to an AI supercomputer from a browser.”

Prior to last week’s recovery, Nvidia shares had given back gains from Nvidia’s GTC conference for AI developers in March. The stock had a massive 239% run in 2023 and is up 75% so far this year.

Bullish analyst price targets for Nvidia stock

After the March conference, UBS analyst Timothy Arcuri raised Nvidia’s price target from 800 to 1,100, while maintaining his buy rating.

Arcuri said that following the launch of the Blackwell platform, “We believe Nvidia is on the cusp of a whole new wave of demand from global enterprises and governments – with each government potentially the size of a major US cloud customer.”

Ahead of the conference, Truist analyst William Stein raised his price target on Nvidia stock from 911 to 1,177. He expects stronger demand for Nvidia chips in 2024 and 2025. Analysts at HSBC also raised their price target, from 880 to 1,050. Both Truist and HSBC maintained a buy rating on the share.

Analysts at Bank of America also recently raised their price target, from 925 to 1,100.

Nvidia Stock: A Beat-and-Raise Fourth Quarter

Nvidia delivered another beat-and-raise quarter in February. Earnings of $5.16 per share on revenue of $22.1 billion beat fourth-quarter expectations of $4.59 and $20.4 billion, respectively.

Previously, the company said the limited supply of AI chips was the biggest challenge to growth. Customers can also wait for the next generation B100 chip expected in the coming quarters. Baird Analysts recently said this was a good thing. B100 chips will deliver better performance and likely have a higher average selling price, analysts said.

The AI ​​chip maker also disclosed its recent interests in several smaller artificial intelligence projects in a filing with the Securities and Exchange Commission.

Nvidia Stock’s Blockbuster Results

Nvidia’s current stock movement dates back to late 2023. At that point, shares broke out of a double-bottom base with a 476.09 buy point on strong volume ahead of third-quarter results in November.

A week before reporting results, Nvidia announced at the SC23 supercomputing conference in Denver that it plans a new artificial intelligence computing platform and an advanced data center chip.

Despite a successful quarter, shares fell after the earnings report but found support at the 50-day moving average. This allowed the stock to form a flat base with a buy point of 505.48. The company said earnings were $4.02 per share.

That amounted to revenues of $18.12 billion for the period ending October 29. Analysts polled by FactSet expected earnings of $3.37 per share on revenue of $16.19 billion.

Compared to the previous year’s quarter, Nvidia’s revenue rose 593%, while revenue spiked 206%.

Demand from data centers was the main reason. Nvidia’s data center revenue rose 279% from the same period last year to a record $14.51 billion. Data center revenue also rose 41% from the quarter ending in July.

Nvidia Stock: 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. Nvidia’s AI-enabled supercomputer has paved the way for AI’s “iPhone moment,” according to Nvidia CEO Jensen Huang.

That helped Nvidia turn the tide of results. It reported three quarters of declining year-over-year sales and four quarters of declining profits. But then the company achieved record growth in both revenue and revenue 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. That will double to $119 billion by 2027

Nvidia’s graphics processing units help accelerate data center computing and AI applications.

Top ratings for Nvidia

Nvidia stock has a best possible score of 99 on both the Composite Rating and the EPS Rating. Its Relative Strength Rating of 98 also shows it is outperforming the vast majority of stocks in the Investor’s Business Daily database.

Nvidia is also one of the Magnificent Seven stocks that led the 2023 stock rally. The other shares do Apple (AAPL), Microsoft, Alphabet, Metaplatforms, Tesla and Amazon.com (AMZN). Some of these tech titans are customers who rely on Nvidia’s cutting-edge chips. Nvidia is also one of the stocks expected to outperform the market in 2024.

Nvidia stock right now comes first in the fabless semiconductor group, which occupies the lofty number 7 position among IBD’s 197 industrial groups. The AI ​​stock regularly appears on the IBD50, IBD Sector Leaders and Technical Leader Lists. The share is also on the IBD Leaderboard.

Is Nvidia a buy?

The share has a C Accumulation/distribution assessmentwhich is an improvement from an E rating a week ago.

Despite its many positives, Nvidia stock is not a buy right now. If the stock regains its 50-day moving average or breaks out of its new base, it would provide an entry opportunity.

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