Nvidia (NVDA) stock gained 9% last week. Shares of the artificial intelligence leader pared some early gains but remained near new highs on Monday. But for investors, the larger question is whether Nvidia stock is a buy now.
At the visual Generative AI event this week, Computer Vision and Pattern Recognition Conference, Nvidia researchers presented several papers on new tools to create and interpret images, videos and 3D applications. The AI chip leader also presented its research on high definition maps used in autonomous vehicles. The company also announced its latest tools to improve sensors simulation used in those vehicles as well as developments in robotics.
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Meanwhile, on Tuesday, analysts at Barclays, Susquehanna and TD Cowen increased their price targets on the stock.
Barclay’s analyst Tom O’Malley and Susquehanna analyst Christopher Rolland raised the price target to 145 from 120, split adjusted. Supply chain checks were reassuring and showed that the transition from Hopper chips to Blackwell will be smooth.
Demand Rising For AI Chips In Servers
Shares came under some pressure in early June after news that Chief Executive Jensen Huang was selling some of his stock. Huang plans to sell up to $735 million of Nvidia stock based on a plan he adopted in March. Nvidia filed a regulatory filing with the Securities and Exchange Commission disclosing the CEO’s plans to sell 600,000 shares by March 2025.
But that did not spoil the AI chip leader’s latest achievement: On June 5, Nvidia’s market cap hit $3 trillion and rose above that of Apple (AAPL).
Earlier, Nvidia said it plans to roll out its most advanced artificial intelligence platform in 2026. The AI chip leader will also use next generation memory to improve process time.
Also in early June, Foxconn announced its plans to build an advanced computing center in Taiwan using Nvidia’s Blackwell chips. Nvidia has teamed up with Foxconn to build data centers to expand into autonomous driving and the electric vehicles market. While leading electric-vehicle player Tesla (TSLA) uses Nvidia’s chips, it plans to custom build them in-house in the future.
Nvidia Stock Split
Shares started trading on a split-adjusted basis on Monday last week. Investors who held Nvidia shares as of the close Friday received nine additional shares for each share owned.
But the split could go beyond just lowering the price of each share. A lower price would make Nvidia a candidate for the Dow 30, which is a price-weighted index.
Previously, Apple (AAPL) and Amazon.com (AMZN) joined the Dow after stock splits.
The stock split will build further momentum for the AI chip leader and present what one analyst called a “generational buying opportunity.”
In late May, Nvidia shares soared above the pre-split 1,100 level for the first time after Tesla Chief Executive Elon Musk indicated the AI chip leader would be a supplier for his AI startup xAI. Musk’s startup raised $6 billion in the latest round of funding over the weekend and it plans to build a supercomputer to support its AI chatbot.
First-Quarter Results Shine
Shares of Nvidia rose to record highs after fiscal first-quarter results beat estimates yet again on May 22. Sales grew 262% to $26 billion while earnings of $6.12 per share were 461% higher.
The AI leader has also teamed up with Microsoft to make the latest AI software available on Nvidia’s graphic processing units.
Earlier, Nvidia shares rose past a handle buy point after the Google AI Conference showed different ways in which artificial intelligence will improve search. The search giant also previewed an Android feature that will alert users to scams during a phone call. While Google’s tensor processing units are rivals to Nvidia’s chips, Nvidia dominates the data center AI chips market.
Ahead of the earnings report, analysts at Baird, Susquehanna and Barclays increased their price targets on Nvidia.
Nvidia stock holds an Accumulation/Distribution Rating of B- on an A+ to E scale.
A Beat-And-Raise Fourth Quarter For Nvidia Stock
Nvidia delivered yet another beat-and-raise quarter in February. Earnings of $5.16 a share on sales of $22.1 billion beat fourth-quarter views of $4.59 and $20.4 billion, respectively.
Earlier, the company said the limited supply of AI chips was the biggest challenge to growth. Customers may also wait for the next-generation B100 chip that is expected in coming quarters.
Baird analysts said this is a good thing. B100 chips will have better performance and will likely have a higher average selling price.
The maker of AI chips also disclosed its recent stakes in several smaller artificial intelligence plays in a filing with the Securities and Exchange Commission.
Nvidia Stock: 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 2023, generative AI took a leap forward with OpenAI’s ChatGPT. According to Nvidia Chief Executive Jensen Huang, 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 in late 2022 and early 2023. But then the company achieved record top- and bottom-line growth in the two most recent quarters.
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 expected to double to $119 billion by 2027.
Nvidia’s graphic processing units help accelerate computing in data centers and AI applications.
Top Ratings For Nvidia
Nvidia stock boasts a best-possible score of 99 on its Composite Rating, EPS Rating and Relative Strength Rating.
Nvidia also is one of the Magnificent Seven stocks that led the 2023 stock rally. The other stocks are Apple, Microsoft, Alphabet (GOOGL), Meta Platforms (META), Tesla and Amazon.com. Some of these tech titans are customers that rely on Nvidia’s advanced chips. Nvidia is also one of the stocks that are forecast to outperform the market in 2024.
Nvidia stock currently ranks first in the fabless semiconductor group. The AI stock frequently appears on the IBD 50, IBD Sector Leaders and Tech Leaders list. Further, the stock is on IBD Leaderboard.
Is Nvidia A Buy?
Chart patterns are a good way of telling when to buy or sell a stock. Nvidia’s chart shows the stock has cleared a pre-split 974 buy point. The stock is already extended according to IBD MarketSurge.
In 2023, AI stock Nvidia had a huge 239% run and it’s up more than 190% so far this year.
Nvidia is past a profit-taking zone from a split-adjusted buy point of 97.40. It’s best now to wait for another base or follow-on buy point to make an initial position in the AI chip stock. It is not a buy right now.
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