Nvidia, touted as the "de facto AI infrastructure company" in a Friday note, and Coherent, another AI data center play, lead this weekend's watch list of five stocks near buy points. In addition to NVDA and COHR, construction-equipment supplier United Rentals has data center exposure. Singapore-based gaming and e-commerce company Sea Ltd. and Expedia Group round out the list.
Nvidia has a 99 IBD Composite Rating out of a possible 99, according to IBD Stock Checkup. The single rating combines both fundamental and technical factors. Sea Ltd., the No. 2-ranked stock in the Retail-Internet industry group, has a 98 IBD Composite Rating.
IBD Stock Lists, Market Take
Sea is part of the IBD Leaderboard portfolio of elite stocks. Nvidia is part of the flagship IBD 50 list of leading growth stocks. Check here for new additions to IBD stock lists.
The S&P 500 inched higher in Friday stock market action, extending its win streak to five sessions and scratching out a third-straight record closing high. For the year, the S&P 500 is up 14.2%.
The bull market trend is intact, allowing investors to have 80% to 100% exposure. Yet that's subject to change at any time.
Market Set-Up: Nvidia A Buy, Palantir A Sell And Big Tesla News Coming
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
A stock's average true range, a metric available on IBD's MarketSurge, reflects its daily volatility. Higher numbers raise the risk of a shakeout that can trigger sell rules. Current market conditions are conducive for buying stocks with pretty high ATRs of up to 8%, but investors should be wary of being too concentrated in high-octane names.
These stocks don't present a concern for excessive volatility. Coherent's 21-day ATR of 4.9% is the highest of the group, followed by Nvidia at 3%.
Nvidia Stock
Cantor Fitzgerald analyst C.J. Muse wrote in a Friday note that Nvidia "is solidifying its position as the de facto AI infrastructure company" and has a "clear path" to a $10 trillion market cap, after just cresting $4.5 trillion.
On Monday, Jefferies analyst Blayne Curtis hiked his price target for NVDA to 220 from 205, keeping a buy rating, following news it will invest $100 billion in OpenAI. That will enable the ChatGPT developer to deploy at least 10 gigawatts of AI data centers, while producing more revenue for Nvidia.
Citi lifted its NVDA price target to 210 from 200, highlighting the company's next-generation Rubin CPX chip as a positive for its competitive positioning. The researchers also think Nvidia's GTC Washington event from Oct. 27-29 featuring technology breakthroughs could be a catalyst.
NVDA rose 5.3% to 187.62 on the week, first clearing a 184.48 flat-base buy point on Tuesday. The buy zone runs through 193.70.
Coherent Stock
"Coherent's transceivers are a key component to the AI tech stack," William Blair analyst Jed Dorsheimer wrote in an Aug. 14 note following fiscal Q4 earnings. The optical transceivers enable high-speed communications between servers and storage systems in data centers.
However, Coherent's data center market revenue growth slowed in its June fiscal fourth quarter to just 3% sequentially, helping to trigger a sharp 19.6% selloff on Aug. 14. Yet COHR stock has climbed back near buy range as several positives have shone through.
In fiscal Q4, Coherent booked the first sales of its 1.6 terabit optical transceivers, doubling the speed of its 800 gigabit predecessor, and sales will continue to ramp up through next year. In August, Coherent announced an expanded partnership with Apple to provide its vertical-cavity surface-emitting laser technology, which enable features such as Face ID on iPhones and iPads.
COHR stock rose 6.2% on the week to 113.58, finishing just below a 115.34 buy point from a cup-with-handle base. Coherent competitors include Lumentum and Fabrinet.
Sea Stock
Sea comprises three different businesses, all of which "have delivered robust, healthy growth," CEO Forrest Li said in an Aug. 12 Q2 earnings statement. Its Shopee e-commerce business in Asia and Brazil saw revenue grow 33.6% to $3.3 billion in the quarter. Shopee is easily the largest of the three businesses by revenue but trails the other two segments in its contribution to earnings.
SeaMoney, its digital financial services unit, saw loan principal outstanding rise 94% from a year ago to $6.9 billion.
Garena, its digital entertainment unit with the hit game Free Fire, saw bookings rise 23% from a year ago. However, the company said full-year bookings growth should top 30%.
In a Sept. 11 note, JPMorgan analyst Ranjan Sharma raised the firm's price target for SE to 230 from 208, keeping an overweight rating. The note highlighted Shopee's progress unlocking advertising revenue, according to a write-up at The Fly investment news site.
SE stock rose 0.2% on the week to 184.91, but the action included a successful test of its 50-day moving average. SE found support just above its prior buy point of 172.65, according to MarketSurge.
The rebound off the 50-day line is flashing an early entry opportunity. Investors may want to see if Sea can move above the 21-day, after finishing just below that level. Clearing Friday's intraday high of 184.77 would also break a short downtrend in an emerging consolidation just above the prior base.
United Rentals Stock
Baird upgraded United Rentals to outperform from neutral on Wednesday, hiking its URI price target to 1,050 from 888. The analyst firm anticipates that a reacceleration of United Rentals' business will lift the stock in 2026. Baird's Q3 rental survey is already seeing some improvement for independent outfits, which it expects United Rentals to outperform.
CEO Matthew Flannery said on the July 24 call that data centers are "a big chunk of work right now, and one that we feel really good about both currently and forward looking."
URI stock rose 3.5% to 980.80 on the week. Shares are in buy range after they made a convincing move clear of their 21-day exponential average and eclipsed a three-weeks-tight formation with a 972.12 buy point, as well as the overall short consolidation peak at 980.53.
Expedia Stock
Expedia is the top-rated stock in IBD's Leisure-Travel Booking industry group, according to IBD Stock Checkup. Known for its Expedia, Hotels.com and Vrbo brands, the company's recent growth driver has been its business-to-business arm, called Private Label Solutions.
While overall revenue grew 6% in Q2, the business-to-consumer sites saw 2% revenue growth, while business-to-business sales rose 15%. Meanwhile, advertising revenue grew 19% off a small base.
EXPE dipped 1.6% to 219.23 on the week, but found support at its 10-week moving average near 210. EXPE could be actionable on a further move above its 10-week line and certainly with a move past 229, which is the top of a three-weeks-tight pattern.
One concern is that travel stocks have been in a mini-slump in the past few weeks.
