Potential continuation of Nvidia's stock increase?
Here's the lowdown on Nvidia's stock and the tech sector:
The tech world, including Nvidia, has been facing a pile-up of challenges recently. From sky-high inflation and sluggish global growth to geopolitical upheavals like the war in Ukraine and US-China tensions, it's a stormy sea out there.
But what about the age-old chip conundrum? You know, the one that went from scarce to plenty? Yep, the COVID-19 pandemic originally fueled demand for chips in 2020, leading to a shortage in later years. But now some experts think this shortage could morph into an oversupply problem this year. Sounds strange, right? But according to Investors.com, it's a possibility.
Even the World Semiconductor Trade Statistics has weighed in, forecasting a 4.1% drop in chip sales for 2023. This follows a 26.2% growth in 2021 and a 4.4% increase in 2022. So it's gonna be a bumpy ride for players in the industry, including Nvidia, a major supplier of data centers and a big shot in the gaming industry.
Remember Nvidia's disappointing third quarter? In November 2022, it missed the earnings target Wall Street set, reporting earnings of 58 cents per share – a 50% decrease from the previous year. Revenue also dropped 17% to $5.93 billion. Will the fourth-quarter results, due on February 22nd, fare any better? Analysts aren't holding their breath; they expect earnings to fall by 39% for the quarter and 26% for the entire year, with no real change in revenue.
But there's a glimmer of hope on the horizon. For the upcoming fiscal year 2023/24, Wall Street expects Nvidia's earnings to recover by nearly 33%. That's still below the peak of the 2022 fiscal year, but it's a improvement nonetheless. This optimistic outlook has sent Nvidia's stock soaring in recent weeks. After hitting a multi-year low of $110 in October, the stock is now up by around three-quarters. On February 14th, it was one of the top performers in the Nasdaq 100, gaining 7.6%. In German trading on the following day, the Nvidia stock stood at €175.60.
So, what's next for the Nvidia stock?
The stock has already risen by 26% in 2023 and is one of the top performers in the Nasdaq 100. It has broken above both the 50-day and 200-day lines, and on February 14th, it also broke above the December interim high – another buy signal. But watch out for these key chart levels:
- $192: This is the level where the stock has previously stumbled. If it can sustain a break above this zone, it could propel the Nvidia stock above the $200 mark.
- $207: This would be the next resistance zone, where the stock found resistance in February and March 2022.
The relative strength for the Nvidia stock is bullish, with the 50-day line set to cross above the 200-day moving average – a typical sign of medium-term price growth.
Investment bank Barclays remains optimistic about Nvidia, predicting a significant increase in price target from $170 to $250 while maintaining an "overweight" rating. This implies a potential upside of 30% from current levels. However, Barclays also sees challenges for the chip industry, particularly in China, where the reopening of the country has led to a COVID-19 wave that's impacting consumption. Additionally, the excitement over the US government's "Chips Act" seems to have cooled off, as accessing funds from the funding program isn't easy.
But there's another factor that could work in Nvidia's favor: artificial intelligence. Not only is Nvidia partnering with Microsoft to advance AI, but its GPUs are also being harnessed as accelerators for central processing units. Plus, Nvidia chips are used in Bitcoin mining and self-driving electric cars.
BOERSE ONLINE is also bullish on the Nvidia stock in the medium term, mainly thanks to the AI story, and has set a price target of 245 euros.
In case you're wondering, the CEO and majority stakeholder of Boersenmedien AG, Mr. Bernd Foertsch, has taken both direct and indirect positions over the financial instruments discussed in the publication or related derivatives, which could benefit from the potential price development resulting from the publication: Nvidia.
- The recent surge in Nvidia's stock, a key player in the technology sector, is partially attributed to the potential growth in artificial intelligence and the company's partnership with Microsoft.
- Analysts predict that if Nvidia can sustain a break above the key chart level of $192, it could propel the stock above the $200 mark, offering an investment opportunity in the finance and investing realm of the stock-market.
