Nvidia is set up to a potential move higher could take the market along for the ride — conflicts and trade wars notwithstanding.
Jay Woods, chief global strategist at Freedom Capital Markets, tells Investor's Business Daily's "Investing with IBD" podcast that the fundamental story for Nvidia remains strong. He takes note of how Nvidia stock is crucial to several indexes like the XLK, the Dow, S&P 500 and its widespread use in investment portfolios.
On a longer-term basis, Nvidia stock continues to show signs of consolidation that began in June 2024, with a recent high set in January this year. The stock continues to remain above key indicators like its 21-day moving average, but has not risen significantly above its 200-day moving average.
The chip giant also remained steady through several crises that tested investor faith. One early test included China's homegrown AI competitor, DeepSeek, which broke an uptrend in Nvidia in January this year. Another test came with President Trump's announcement of tariffs, raising uncertainty in the economy and muting bullishness in larger stocks like Nvidia.
Woods says Nvidia has remained steadfast despite these setbacks. "Earnings-wise, you look at the numbers and look at the revenue it generates — they're still crushing it," he said.
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Nvidia Stock's Fundamental Strengths Stay Strong
Traders watching names with solid fundamentals like Nvidia stock should focus on trendlines, not headlines, Ralph Acampora, CMT and cofounder of the CMT Association, told IBD's "Investing with IBD" podcast. "The trend's your friend," said Acampora. Following trendlines can help clearly visualize if a stock is performing or if trends and moving averages no longer reflect solid performance.
"Risk management is what technical analysis is all about. You know when you're wrong," said Acampora. "I call it data visualization."
That picture is set to continue. "They're crushing it right now, but price action has stalled and what is it doing? It's consolidating and it's ready to break out to the upside," Woods said.
The mystery remains of what will be the catalyst that could cause Nvidia stock to run. "But right now, price action is starting to narrow and it's narrowing at that high end of the range, and with one catalyst people have been waiting for, it's going to cause a breakout and run," said Woods.
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