Nvidia (NVDA) fell more than 1% in early trading Wednesday as it headed toward announcing its fourth-quarter results after the market close.
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Meanwhile, the company sees the limited supply of AI chips as the biggest challenge to growth. Customers can also look forward to the next-generation B100 chip, expected in the coming quarters. Tuesday, Baird Analysts considered this a good thing. B100 chips will have better performance and will likely have a higher average selling price.
Last week, the AI chipmaker unveiled its recent stakes in several small AI coins in a filing with the Securities and Exchange Commission.
On Monday of last week, shares hit an all-time high of 746.11. Chief Executive Officer Jensen Huang gave an optimistic outlook for data center spending, a key segment for Nvidia. Does this mean Nvidia stock is a buy now?
At the World Government Summit in Dubai, Huang said that « over the next four or five years, we’re going to have $2 trillion worth of data centers powering software around the world, and all of that is going to be accelerated. »
Huang added that countries can now « create computer technologies that no one needs to program. » “Everyone in the world is a programmer now.”
Nvidia’s graphics processing units help accelerate computing in data centers and AI applications. Meanwhile, analysts at Melius Research increased their price target from 750 to 920.
Stocks rebounded after Apple (AAPL), Amazon.com (AMZN) And Metaplatforms (META) published its quarterly results.
Nvidia shares are above a profit zone from a 505.48 entry.
Strong profits from Meta boosted technology stocks, including Nvidia. Nvidia stock has gained 24% in January alone and is up 11% in February so far, despite this week’s selloff.
Charting Nvidia’s price targets
In January, Bank of America analyst Vivek Arya reportedly set a price target of 700 for the AI leader. Bernstein analyst Stacy Rasgon also finds this company’s valuation attractive and has the same price target.
IBD MarketCharting tools show that shares of the « Magnificent Seven » stock rose after KeyBanc analysts raised their price target for the artificial intelligence leader from 650 to 740. Also in January, quarterly reports of Taiwan Semiconductor (TSM) And ASML (ASML) gave chip stocks a boost.
Earlier in January, the leading artificial intelligence chipmaker unveiled its new GeForce graphics processors at CES. The chips are designed for AI-enabled laptops and PCs. It also said electric vehicles used its automated driving system. Li Auto (LI) and other electric vehicle manufacturers have selected Nvidia Drive Thor for their fleets.
The AI chip leader rose 239% in 2023 and hit an all-time high of 505.48 just before the end of the year. Then, it surpassed its base’s 505.48 buy point in heavy volume on January 8.
Nvidia Stock: Third Quarter Results
Shares broke out of a double bottom just before third-quarter earnings were released in November.
A week before reporting results, Nvidia announced a new artificial intelligence computing platform and advanced system at the SC23 supercomputing conference in Denver data center chip. This sent the stock to its all-time high.
Despite a stellar quarter, shares fell after the earnings release. The company said its earnings were $4.02 per share. This translated into revenue of $18.12 billion for the period ended October 29. Analysts surveyed by FactSet expected earnings of $3.37 per share on revenue of $16.19 billion.
Compared to last year’s quarter, Nvidia Earnings soared 593%, while sales saw an increase of 206%. This is also the second consecutive quarter in which the chip leader has seen triple-digit growth in both metrics.
Data center demand was the main reason. Nvidia’s data center sales jumped 279% from the previous year to a record $14.51 billion. Data center sales also increased 41% from the second quarter.
When filing its earnings report, Nvidia forecast revenue of $20 billion for the fourth quarter ending in January. This translates to growth of 231% from the previous year and exceeds analysts’ forecasts for $17.96 billion.
Nvidia stock analysts now expect earnings per share to grow 239% to $11.22 for fiscal 2024, which ends this month. After that, Wall Street sees earnings growth slowing sharply to 69% in fiscal 2025.
AI Products Drive Growth
Nvidia has earned a reputation for being a pioneer. The company was an early pioneer of graphics processors that many believe have dramatically improved computer gaming. Besides gaming, Nvidia chips are now used in industries such as healthcare, automotive and robotics.
In March, generative AI took a big step forward with OpenAI’s ChatGPT. According to the company, Nvidia’s AI-enabled supercomputer has paved the way for the « AI iPhone moment. »
This helped Nvidia turn the tide on its results. It reported three quarters of declining sales year-over-year and four quarters of declining profits. But then the company saw record growth in its top and bottom line over the past two quarters.
Top marks for Nvidia
Nvidia stock demonstrates exceptional technical strength and posts a best possible score of 99 on its two levels. Composite score And EPS rating. It is Relative Strength Rating of 98 also shows that it outperforms the vast majority of stocks in Investor’s Business Daily database.
Nvidia is also one of the Magnificent Seven that led the 2023 stock market rally. The other stocks are Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGLE), Metaplatforms (META), You’re here (TSLA) And Amazon (AMZN). Some of these tech titans are customers who rely on Nvidia’s advanced chips. It is also one of the « The Magnificent Seven of 2024« .
Nvidia stock currently ranks first in the fabless semiconductor group, which ranks 16th among IBD’s 197 industry groups. AI stock frequently appears on the MII 50ITN industry leaders and Technology leaders lists. Plus, the title is on IBD Ranking.
In November, Nvidia stock jumped 15% and outperformed the Nasdaq’s 10.70% gain. But in December, it finished up 6%, just above the Nasdaq’s 5.5% advance for the month.
Is Nvidia a Stock, a Buy?
THE Accumulation/distribution rate for Nvidia stock is B+. This shows that institutional buyer interest over the past 13 weeks remains strong.
The overall global revenue of AI chips will increase by 26%, from $53.4 billion in 2023 to $67.1 billion in 2024, according to a study. recent report from the research firm Gartner. This amount is expected to double by 2027 to $119 billion.
Nvidia stock is not a buy at the moment. Shares are extended from a buy zone coming from the 505.48 entry of a flat base.
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