Nvidia Is Sitting Quietly After Another Strong Report

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Nvidia is the only member of the S&P 500 that’s tripled this year. Now it’s stuck near record highs as traders enter the home stretch into 2024.

This chart highlights some a few patterns on the semiconductor giant. First, notice how prices have shown signs of potentially stabilizing near the mid-October peak around $476. Traders sometimes think it’s bullish when an old high becomes a new low, or “resistance becomes support.” That could increase the importance of the current price range, down toward $470. (Nearer to the previous closing price.)

The second pattern is the 21-day exponential moving average (EMA). This indicator marked NVDA’s uptrend in the first half, with price bounces in February, March and April. (It’s been less relevant recently.) This day EMA is also a common measure of the short-term trend. Holding that line in the next few sessions could make investors think the direction is still headed upward.

AI Earnings

NVDA also reported strong quarterly results on November 21. Earnings, revenue and guidance shot past estimates as Artificial Intelligence (AI) fueled demand for data-center chips. The stock initially tried to rally on the news but fell after Reuters reported it would delay shipping Chinese products that comply with U.S. export restrictions.

It was the fourth straight quarter that Jensen Huang’s company surprised to the upside. The really big move occurred on May 25 after NVDA hiked revenue guidance by more than 50 percent. That news soon lifted its market capitalization above $1 trillion, a status shared with only Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL) and Amazon.com (AMZN).

More AI News

NVDA hasn’t had many headlines since last week’s earnings. Amazon.com (AMZN) announced a new chatbot named Q for its AWS cloud-computing platform. AMZN also unveiled a new chip that will compete with a similar product from Microsoft (MSFT). Neither AMZN or MSFT are trying to challenge NVDA’s leadership in AI chips. They’re simply looking to bolster their own cloud-computing power as demand for machine-learning widens.

Analysts generally see growth in either AMZN or MSFT helping NVDA.

MSFT also received a bullish note yesterday from Tigress Financial, which raised its price target from $433 to $475. The firm cited AI, cloud computing and enterprise spending.

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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.