Nvidia (NVDA) fell on Tuesday after Chief Executive Jensen Huang discussed the artificial intelligence leader’s new chip, Blackwell. The new AI chip will accelerate computing and will available through several Nvidia partners later in the year.
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After huge runs — it soared 239% in 2023 and is up more than 70% thus far this year — is Nvidia stock a buy now?
Huang gave the speech on Monday when the event started. Ahead of the conference, Truist analyst William Stein raised Nvidia’s price target 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.
Earlier, analysts at Bank of America raised their price target to 1,100 from 925 last week.
Nvidia delivered yet another beat-and-raise quarter in February. Earnings of $5.16 per share on sales of $22.1 billion beat views of $4.59 earnings per share and $20.4 billion in sales.
Earlier, the company observed that limited supply of AI chips as the biggest challenge to growth. Customers may also wait for the next generation B100 chip that is expected in the coming quarters. Baird analysts saw this as a good thing. B100 chips will have better performance and will likely have a higher average selling price.
The AI-chip maker also disclosed its recent stakes in several smaller AI plays in a filing with the Securities and Exchange Commission.
Also in February, Chief Executive Jensen Huang gave a rosy outlook for data center spending — a key segment for Nvidia. Does that mean Nvidia stock is a buy now?
At the World Government Summit in Dubai, Huang said that “over the course of the next four or five years we’ll have $2 trillion worth of data centers that will be powering software around the world, and all of it’s going to be accelerated.”
Huang added that countries can now “create computing technologies that nobody has to program.” “Everybody in the world is now a programmer.”
Next Steps : AI Conference
So what is next for the stock?
The AI leader has partnered with ServiceNow (NOW) to release an open-access platform for coders.
Earlier, Nvidia announced that its advanced chips will be available in portable workstations and will accelerate video streaming and other content related tasks. The chips will be available on workstations made by Dell Technologies (DELL), Lenovo (LNVGY) and other companies.
Meanwhile, the company’s AI Conference and Expo, Nvidia GTC, will run March 18-21. Huang delivered the keynote address, while experts from Meta Platforms (META), Stanford University, Ford Motor (F) and others are scheduled to speak.
Barron’s reported that a new chip could be the next catalyst for the stock.
Charting Nvidia’s Price Movements
IBD MarketSurge’s chart tools show that shares of the “Magnificent Seven” stock rose after analysts at KeyBanc raised their price target for the artificial intelligence leader to 740 from 650. Also in January, quarterly reports from Taiwan Semiconductor (TSM) and ASML (ASML) gave chip stocks a boost.
Earlier in January, the leading maker of artificial intelligence chips disclosed at CES new GeForce graphic processors. The chips are designed for AI-enabled laptops and PCs. It also said electric vehicles are using its automated driving system. Li Auto (LI) and other EV makers have selected Nvidia Drive Thor for their fleets.
The IBD Leaderboard holding and leader in AI chips rallied 239% in 2023 and hit an all-time high 505.48 just before the year ended. Then it topped, the 505.48 buy point of its base in heavy volume on Jan. 8.
However, as shares fell in a big outside day on Friday last week, volume was the highest since Aug. 24, when the stock was still forming a base.
Nvidia Stock: Third-Quarter Earnings
Shares broke out of a double-bottom base just ahead of third-quarter earnings in November.
A week before reporting results, Nvidia announced at the SC23 supercomputing conference in Denver a new artificial intelligence computing platform and an advanced data-center chip.
Despite a blockbuster quarter, shares fell after the earnings report. The company said profits came in at $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 second quarter.
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, generative AI took a leap with OpenAI’s ChatGPT. According to the company, 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.
Top Ratings For Nvidia
Nvidia stock shows exceptional technical strength and 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 (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Meta Platforms (META), Tesla (TSLA) and Amazon (AMZN). Some of these tech titans are customers that rely on Nvidia’s advanced chips. It is also one of the “Magnificent Seven of 2024.”
Nvidia stock currently ranks first in the fabless semiconductor group, which holds 16th place 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.
In November, Nvidia stock jumped 15% and outperformed the Nasdaq’s 10.70% gain. But in December, it finished up 6%, just above the Nasdaq’s 5.5% advance for the month.
Is Nvidia A Stock A Buy?
The stock holds an Accumulation/Distribution Rating of B+. That shows strong interest among institutional buyers over the last 13 weeks.
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 set to double by 2027 to $119 billion
Nvidia’s graphic processing units help accelerate computing in data centers and AI applications.
Nvidia stock is not a buy right now. Shares are extended from a buy zone that originated from a flat base’s 505.48 entry.
The pullback this week is too short a time period for a new proper base. Meanwhile heavy selling shows weakening action for the AI chip leader.
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