Nvidia (NVDA) stock has had a very bullish week, up more than 7% for the week, with the stock surging toward a consolidation buy point. Shares have risen in recent weeks after company executives said the company’s new Blackwell chips would be sold out for the next 12 months.
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Gains in this major chip stock could be a barometer of the strength of AI spending
Apple iPhone maker Foxconn plans to increase server capacity to meet “extraordinary” demand for Nvidia’s Blackwell chips, according to a report earlier this week. Shares rose about 4% on Tuesday on the news. Additionally, chipmaker Taiwan Semiconductor (TSM) reported early Wednesday that strong third-quarter sales helped boost Nvidia’s stock.
NVIDIA stock currently trades just 4% below the consolidation’s fair buy point of 140.76. This level also represents a split-adjusted all-time high.
The stock remains actionable after breaking above the recent horizontal resistance at 131.26. A smart investor could have taken advantage of the downward trend line within the current threshold on Monday and bought the stock when the price rose above it.
Investors should note that the stock is currently up 14% from its 50-day moving average. When a stock price increases significantly, the risk of a pullback increases. However, while not hitting new highs, the relative strength line is approaching highs, a sure sign of strength.
Nvidia Stock: Second Quarter Earnings
Nvidia has long been a pioneer in graphics processors used in industries such as healthcare, automotive, and robotics. However, in March 2023, OpenAI’s ChatGPT made a major technological breakthrough with generative artificial intelligence.
And Nvidia’s AI-enabled supercomputer paved the way for the “iPhone AI moment,” according to CEO Jensen Huang.
This contributed to the company’s earnings expansion. Nvidia has achieved record revenue and bottom line growth in the last five quarters.
In its most recent quarter, Nvidia’s profits beat Wall Street expectations. Meanwhile, sales were $30.04 billion, higher than analysts’ expectations of $28.7 billion. Revenue also increased 122% year over year.
Nvidia stock earned 68 cents per share, beating analysts’ expectations of 65 cents. This was a 152% increase over the previous year. The company also guided for upward revisions to its current quarter estimates for revenue of $32.5 billion and views of $31.7 billion.
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