Nvidia rose past a buy point Wednesday after the Google AI Conference showed different ways in which artificial intelligence will improve search. The search giant also previewed an Android feature that will alert users to scams during a phone call. While Google's "tensor" processing units are rivals to Nvidia's chips, Nvidia dominates the data center AI chips market.
Investors await Nvidia's May 22 earnings report, which could be a catalyst for further gains. A disappointing result, however, could send the stock sliding. Current holders with big gains in Nvidia may consider risk management by trimming the position to protect gains and limit downside risk before Nvidia announces earnings.
Earnings brings with it its own risks and other investors holding shares could be asking themselves, "should I continue to hold or take some profits?" Trading decisions can be challenging, even with market leaders like Nvidia.
The stock holds a D Accumulation/Distribution Rating, which is an improvement from an E rating two weeks ago. The stock is also a holding on IBD SwingTrader.
Nvidia Stock Tops Buy Point
Chart patterns are good ways of telling when to buy or sell a stock. Nvidia's chart shows the stock topped the 922.20 buy point from a handle Wednesday. The stock is in buy range to 968.31. According to IBD MarketSurge, the stock has an alternative buy point at 974.
On April 24, Nvidia entered into an agreement to buy Run.ai. According to TechCrunch, the price tag is $700 million. Run.ai helps developers use AI tools more efficiently and reveals Nvidia's road map and priorities. Run.ai works with Nvidia's Cloud AI product that helps businesses get "instant access to an AI supercomputer from a browser."
Nvidia stock had a huge 239% run in 2023 and is up over 80% so far this year.
Analysts' Bullish Price Targets For Nvidia Stock
After its AI developers event in March, UBS analyst Timothy Arcuri increased Nvidia's target price to 1,100 from 800 while maintaining a buy rating.
Arcuri said that following the Blackwell platform launch, "We believe Nvidia sits on the cusp of an entirely new wave of demand from global enterprises and sovereigns — with each sovereign potentially as big as a large U.S. cloud customer."
Ahead of the conference, Truist analyst William Stein raised his price target on Nvidia stock to 1,177 from 911. He sees stronger demand in 2024 and 2025 for Nvidia's chips. Analysts at HSBC also increased their price target, going to 1,050 from 880. Both Truist and HSBC maintained a buy rating on the stock.
Analysts at Bank of America also recently raised their price target, going to 1,100 from 925.
For the April-ended quarter, analysts polled by FactSet expect earnings of $5.22 per share on sales of $24.4 billion. That translates to earnings growth of 473% from the year-ago quarter, while sales are expected to grow 242%.
Nvidia Stock: A Beat-And-Raise Fourth Quarter
Nvidia delivered yet another beat-and-raise quarter in February. Earnings of $5.16 a share on sales of $22.1 billion beat fourth-quarter views of $4.59 and $20.4 billion, respectively.
Earlier, the company said the limited supply of AI chips was the biggest challenge to growth. Customers may also wait for the next-generation B100 chip that is expected in coming quarters.
Baird analysts recently said this is a good thing. B100 chips will have better performance and will likely have a higher average selling price.
The maker of AI chips also disclosed its recent stakes in several smaller artificial intelligence plays in a filing with the Securities and Exchange Commission.
Nvidia Stock's Blockbuster Results
Nvidia's current stock move traces back to late 2023. At that time, shares broke out of a double-bottom base with a buy point of 476.09 in strong volume ahead of third-quarter results in November.
A week before reporting the 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 blockbuster quarter, shares fell after the earnings report but found support at their 50-day moving average. That allowed the stock to form a flat base with a buy point of 505.48. The company said profits were $4.02 a share.
That came on sales of $18.12 billion for the period ended Oct. 29. Analysts polled by FactSet had expected earnings of $3.37 a share on sales of $16.19 billion.
Compared with the year-ago quarter, Nvidia earnings soared 593%, while sales saw a 206% spike.
Demand from data centers was the chief reason. Nvidia's data-center sales jumped 279% from the year-earlier period to a record $14.51 billion. Data-center sales also increased 41% from the July-ended quarter.
Nvidia Stock: AI Products Drive Growth
Nvidia has earned a reputation for being a trailblazer. The company was an early pioneer in the graphics processors that many say drastically improved computer gaming. Along with gaming, Nvidia chips now are used in such industries as health care, automobiles and robotics.
In March 2023, generative AI took a leap forward with OpenAI's ChatGPT. According to Nvidia Chief Executive Jensen Huang, Nvidia's AI-capable supercomputer paved the way for the "iPhone moment of AI."
That helped Nvidia turn the tide on its results. It reported three quarters of declining year-over-year sales and four quarters of tapering earnings. But then the company achieved record top- and bottom-line growth in the two most recent quarters.
Overall worldwide AI chip revenue will grow 26% from $53.4 billion in 2023 to $67.1 billion in 2024, according to a recent report from research firm Gartner. That is expected to double to $119 billion by 2027.
Nvidia's graphic processing units help accelerate computing in data centers and AI applications.
Top Ratings For Nvidia
Nvidia stock boasts a best-possible score of 99 on both its Composite Rating and EPS Rating. Its Relative Strength Rating of 98 also shows that it outperforms the vast majority of stocks in the Investor's Business Daily database.
Nvidia also is one of the Magnificent Seven stocks that led the 2023 stock rally. The other stocks are Apple, Microsoft, Alphabet, Meta Platforms, Tesla and Amazon.com. Some of these tech titans are customers that rely on Nvidia's advanced chips. Nvidia is also one of the stocks forecast to outperform the market in 2024.
Nvidia stock currently ranks first in the fabless semiconductor group, which holds the lofty No. 7 spot among IBD's 197 industry groups. The AI stock frequently appears on the IBD 50, IBD Sector Leaders and Tech Leaders lists. Further, the stock is on IBD Leaderboard.
Is Nvidia A Buy?
With a breakout past a handle buy point Wednesday, Nvidia stock is a buy right now. The stock has retaken its 50-day moving average also, which would have been an entry only for aggressive traders. The relative strength line is near new highs, which is a good sign for the breakout.
