Nvidia, Quanta Services, Emcor, Rhythm Pharmaceuticals and DoorDash are stocks to watch this week as their charts trade firmly amid a down week for the general market.
The market pulling back but finding support is a recipe for handles and other bullish setups.
Artificial intelligence stocks have pulled back, but three of the five stocks to watch are part of that trade. Nvidia is the principal designer of AI chips, while Quanta and Emcor support AI with data center construction work.
AI stocks can be volatile, and investors can use the 21-day average true range (ATR) to gauge that risk. The average true range is available on IBD MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
The five stocks to watch are all near buy points, with most forming bases.
Nvidia Stock In Flat Base
Nvidia stock touched an all-time high Monday but settled back to its 50-day moving average after an attempted breakout. The stock remains in a flat base with a 184.48 buy point, while other AI stocks have weakened the past week.
The AI chip company has a highest-possible Composite Rating of 99. Although earnings growth has slowed from the triple-digit pace of its fiscal 2024, it remained at an impressive clip of 33% to 71% the three most recent quarters. Revenue increased 56% to 78% the past three periods.
In one of the most recent analyst notes, Barclays analyst Tom O'Malley reiterated an overweight rating on Nvidia and raised his price target to 240 from 200. Shares traded Friday around 177.
The analyst has turned more bullish on Nvidia, citing increased investments by cloud computing firms in artificial intelligence data centers. Nvidia will be a principal beneficiary of that increased spending, although it also favors rival AI accelerator producers AMD and Broadcom.
The Wall Street Journal reported Friday that the Trump administration could impose tariffs on companies that make fewer chips in the U.S. than their customers import from overseas foundries.
A Bank of America analyst said U.S.-concentrated chipmakers such as Intel and Micron could benefit, while large fabless suppliers such as Nvidia are likely to increase their orders to Taiwan Semiconductor's U.S.-based manufacturing, TheFly.com reported.
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Quanta Is AI Stock In Buy Area
Quanta Services is forming a cup-without-handle base and is trading about 5% below the 424.94 buy point. Shares are already up about 28% year to date. PWR stock is already above a 400.87 early entry.
The heavy-construction company's earnings increased 21%, 44%, 26% and 31% the past four quarters amid a building rush for data centers. Sales increased 16%, 13%, 24% and 21% the most recent periods, according to IBD MarketSurge.
Analysts are mostly bullish on Quanta, with 18 making buy recommendations, 15 with hold ratings and only one sell rating, according to FactSet. The consensus earnings estimate for this year is $10.57, an increase of 17.8%. Sales are expected to climb 16.8% to $27.657 billion.
On Tuesday, Jefferies upgraded Quanta to buy from hold and raised the price target to 469 from 398. Analysts said Quanta's addressable market is expanding across data centers, renewables, transmission and pipelines, TheFly.com reported. Jefferies sees Quanta's top-tier customers and craft-labor leverage driving high-teens earnings growth into the next decade.
Other analysts have been equally bullish. For example, Mizuho earlier this month said the company is positioned to benefit from a grid and electrification "supercycle," with secular growth in data centers, grid modernization and clean energy.
The company builds electric plants and provides other services for the power grid. The need for artificial intelligence computations is fueling a boom in data centers, which require massive amounts of electricity. Meanwhile, many companies are shifting manufacturing into the U.S., resulting in more factory construction.
Quanta stock has a Composite rating of 97 and an ATR of 2.92%.
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Emcor Stock Trades Tightly
Emcor stock has been trading tightly for more than a month as it forms a flat base with a 667.64 buy point. Shares are finding support at the 10-week moving average while forming the base, a positive sign. The relative strength line is near highs also.
Investors could use the Sept. 23 high of 660.43 as an early entry.
The company has the highest EPS Rating in the building services industry group after EPS rose 61%, 41%, 30% and 28% the past four quarters. Sales climbed 15%, 10%, 13% and 17%.
The consensus earnings estimate for this year is $25.23 per share, for an increase of 17.2%, according to FactSet. Sales are estimated to rise 14.9% to $16.732 billion.
Norwalk, Conn.-based Emcor — which became part of the S&P 500 index on Monday — builds data center infrastructure and power generation systems.
Earlier this month, William Blair analyst Tim Mulrooney initiated coverage of Emcor with an outperform rating. Emcor and Comfort Systems are strategic linchpins of industrial reshoring policy in the U.S., TheFly.com said of the report. Demand for the companies' services is unlikely to slow down anytime soon, as the U.S. remains in the early stages of a reshoring capex supercycle, the analyst said.
On Wednesday, the company sold its United Kingdom building services business to OCS Group UK, an international facilities services company, in a deal valued at about $255 million. The company said the sale is part of a strategy to focus more on the momentum in its U.S. business.
Emcor has a Composite Rating of 98 and ATR of 2.97%.
DoorDash A Stock To Watch In Retail
DoorDash shares are forming a cup-with-handle base with a 269.06 buy point. Shares are holding above the 50-day moving average as the base develops, bouncing from the 21-day line late in the week.
The stock has more than quadrupled from an initial breakout in May 2023 and is up more than 55% year to date. But DoorDash reset its base count when it declined 28% last March and April and undercut a previous base. Its current base, thus, is second stage.
After years of losses, the food-delivery service turned profitable last year and analysts expect more profits ahead. The average 2025 earnings estimate is $2.47 a share, up from a profit of 29 cents in 2024, according to MarketSurge. Estimates for 2026 are for a profit of $3.94 a share.
DoorDash, Friday's IBD Stock Of The Day, is trying to expand delivery by drones, and has a team working on proprietary delivery robots. It already has partnerships with Wing, an Alphabet subsidiary, and other drone delivery companies, reports say. DoorDash is making deliveries in some areas using drones from Flytrex, an Israel-based company.
DoorDash competes with Uber Technologies' Uber Eats and other meal-delivery services.
The Composite Rating of 98 is the highest of 58 stocks in the internet retail industry group. Its ATR is 2.27%.
Rhythm Pharmaceuticals Holds Key Level
Rhythm Pharmaceuticals is testing support at the 10-week moving average, trading tightly. A rebound off this support level would offer a new entry, perhaps around the 100 price level. The stock is needing a new entry after rallying 45% from its 68.58 base buy point.
Most of that gain came on July 9, when shares shot up nearly 37% on positive trials for bivamelagon, which may treat a rare disorder called acquired hypothalamic obesity. It was the stock's best day ever.
More recently, there's been bullish analyst commentary on the biotech's drug development. This week, several analysts raised their price targets after the company hosted an event to discuss setmelanotide as a treatment for hypothalamic obesity. Expectations are growing for FDA approval.
Like most biotechs, Rhythm Pharma is not profitable. But its sales growth is strong, ranging from 26% to 73% the past four quarters. Analysts expect the company to lose $2.92 a share this year vs. a loss of $4.34 a share last year.
Despite that, analysts are nearly unanimously bullish on the stock, with 14 of 15 putting buy recommendations. Only one analyst has a hold rating.
The losses drag down Rhythm's Composite Rating to 74. The stock has an ATR of 3.27%.
