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Nvidia, the Market Leader, is Breaking Out on Volume
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Nvidia ((NVDA - Free Report) ) is the worldwide leader in graphic processing units (GPUs). In my opinion, as far as growth stocks are concerned, it is the “true market leader” in the current market cycle. The stock has all the characteristics of a leading stock, including a unique product offering, liquidity, fundamentals, and the price and volume strength to go with it.
Unique product offering: Nvidia has found its way into some of the market’s most intriguing growth areas, such as data centers. Nvidia is the undisputed leader in the data center space. Currently, the AI market is growing at an unprecedented pace. As AI grows, so will the need for more robust data centers. Furthermore, NVDA chips are used in other high-growth areas such as autonomous driving vehicles and crypto mining “rigs”.
Liquidity: Institutional growth investors look for what I call the “magic elixir” – high growth potential and deep liquidity. From a liquidity perspective, NVDA is worth $700 billion and trades 48 million shares per day on average. From a growth perspective, analysts tracked by Zacks expect the company to more than double earnings next quarter on a year-over-year basis.
Image Source: Zacks Investment Research
Fundamentals: NVDAis a cash-rich company with a strong balance sheet. The company has over $13 billion in cash on hand while it has debt of only $9.7 billion. Since the company has billions in net cash, NVDA can use existing cash for strategic acquisitions and growth opportunities to maintain its dominance in the semiconductor sector. NVDA also boasts a return on equity (ROE) of 26.61 versus the peer group average of 19.45. In other words, NVDA is much more financially efficient than its industry peers.
Technical View: NVDA has had the “cleanest” price and volume trend out of almost any company on Wall Street this year. The stock is outperforming 98% of the market. Since we do not like chasing stocks, I patiently waited for NVDA to present a low-risk entry point. NVDA has consolidated for five weeks, which should help to burn off excess bullishness. As of this morning, the stock is breaking out on heavy volume – a bullish sign.
Image Source: Zacks Investment Research
Investors who are involved in NVDA should watch Advanced Micro Devices ((AMD - Free Report) ) EPS report tonight as it may have a short-term impact on shares of NVDA.
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Nvidia, the Market Leader, is Breaking Out on Volume
Nvidia ((NVDA - Free Report) ) is the worldwide leader in graphic processing units (GPUs). In my opinion, as far as growth stocks are concerned, it is the “true market leader” in the current market cycle. The stock has all the characteristics of a leading stock, including a unique product offering, liquidity, fundamentals, and the price and volume strength to go with it.
Unique product offering: Nvidia has found its way into some of the market’s most intriguing growth areas, such as data centers. Nvidia is the undisputed leader in the data center space. Currently, the AI market is growing at an unprecedented pace. As AI grows, so will the need for more robust data centers. Furthermore, NVDA chips are used in other high-growth areas such as autonomous driving vehicles and crypto mining “rigs”.
Liquidity: Institutional growth investors look for what I call the “magic elixir” – high growth potential and deep liquidity. From a liquidity perspective, NVDA is worth $700 billion and trades 48 million shares per day on average. From a growth perspective, analysts tracked by Zacks expect the company to more than double earnings next quarter on a year-over-year basis.
Image Source: Zacks Investment Research
Fundamentals: NVDAis a cash-rich company with a strong balance sheet. The company has over $13 billion in cash on hand while it has debt of only $9.7 billion. Since the company has billions in net cash, NVDA can use existing cash for strategic acquisitions and growth opportunities to maintain its dominance in the semiconductor sector. NVDA also boasts a return on equity (ROE) of 26.61 versus the peer group average of 19.45. In other words, NVDA is much more financially efficient than its industry peers.
Technical View: NVDA has had the “cleanest” price and volume trend out of almost any company on Wall Street this year. The stock is outperforming 98% of the market. Since we do not like chasing stocks, I patiently waited for NVDA to present a low-risk entry point. NVDA has consolidated for five weeks, which should help to burn off excess bullishness. As of this morning, the stock is breaking out on heavy volume – a bullish sign.
Image Source: Zacks Investment Research
Investors who are involved in NVDA should watch Advanced Micro Devices ((AMD - Free Report) ) EPS report tonight as it may have a short-term impact on shares of NVDA.