Nvidia Stock Regains Momentum: What’s Driving the AI Chip Leader?

Nvidia Stock Surges – Nvidia (NVDA) stock has recently regained its 50-day moving average, marking a potential turning point as it moves toward a four-day rally. This development might tempt investors to jump back in, but it’s essential to evaluate several technical measures, chart readings, and follow time-tested trading rules to increase the likelihood of success. As of this week, Nvidia’s stock has gained 16%, according to IBD MarketSurge’s weekly chart. However, with the company approaching its second-quarter earnings report later this month, Nvidia’s recent stock performance reflects a mix of promising and concerning signals.

Navigating Market Volatility and Risk Management

The recent market volatility underscores the importance of risk management when timing stock picks. The rally confirmation on Tuesday has somewhat mitigated the risk for investors, with shares rising to reclaim the 21-day exponential moving average. This upward movement followed news that Huawei Technologies, a China-based tech giant, is testing an advanced artificial intelligence chip comparable to Nvidia’s H100. Nvidia continues to face challenges due to U.S. sanctions, which restrict the export of its advanced data center chips to China. Reports suggest that Huawei’s chip, the 910C, could also encounter obstacles from potential new U.S. sanctions targeting machine components.

Nvidia’s Earnings-Fueled Stock Run in 2023 and 2024

Nvidia’s earnings have been a significant driver of its stock’s performance in 2023 and 2024, illustrating the importance of strong fundamentals in the Investor’s Business Daily (IBD) methodology. The company’s AI-related stocks saw a massive 239% increase in 2023. However, after losing ground in July and August, Nvidia’s stock is now up just over 140% year-to-date. While strong fundamentals are crucial, they represent just one of the four pillars of successful investing. Investors should also consider the stock’s technical strength, market direction, and risk management.

The Impact of AI Chip Demand on Nvidia’s Stock

Meta Platforms (META) recently provided a boost to Nvidia by announcing increased AI spending plans. As a major customer, Meta’s commitment to installing 350,000 Nvidia H100 graphic cards by the end of the year has positively impacted Nvidia’s stock. In June, Nvidia announced plans to launch its most advanced AI platform in 2026, which will include next-generation memory to improve processing time. Additionally, Nvidia has partnered with Foxconn to build advanced computing centers in Taiwan, expanding into autonomous driving and electric vehicles. Although Tesla currently uses Nvidia’s chips, the electric vehicle manufacturer has plans to develop its custom chips in-house.

Nvidia Stock Split and Its Potential Impact

Nvidia’s stock split, which took effect on June 10, could have implications beyond merely lowering the stock price. A lower price might make Nvidia a candidate for inclusion in the Dow 30, a price-weighted index. Previous tech giants like Apple (AAPL) and Amazon (AMZN) joined the Dow following stock splits. The split could also build momentum for Nvidia, presenting what some analysts describe as a “generational buying opportunity.”

Nvidia’s First-Quarter Results and Upcoming Second-Quarter Report

Nvidia’s stock reached record highs following its fiscal first-quarter results on May 22, which surpassed expectations. Sales surged 262% to $26 billion, while earnings per share rose 461% to $6.12. As the company prepares to release its second-quarter results on August 28, investors are cautiously optimistic. Nvidia has also teamed up with Microsoft to make the latest AI software available on its graphic processing units, further strengthening its position in the market.

Is Nvidia Stock a Buy Now?

Chart patterns can provide valuable insights into when to buy or sell a stock. Nvidia’s chart indicates that the stock is currently working on a base with a potential buy point at 136.15, as noted by IBD MarketSurge. The stock’s recent recovery of the 50-day moving average could be an early entry point, although the trading volume has been below average. Ideally, buying when the volume is higher improves the chances of realizing more significant gains. However, investors should remain cautious as Nvidia’s earnings report later this month could introduce new risks. Additionally, the stock’s institutional support has room for improvement, as reflected in its Accumulation/Distribution Rating of E, indicating heavy selling in recent weeks.

Conclusion: The Future Outlook for Nvidia

Nvidia’s stock continues to be a strong performer, supported by its leadership in AI chips and its partnerships with major tech companies. While the stock has experienced volatility, the long-term outlook remains positive, particularly as demand for AI chips continues to rise. Investors should carefully consider the technical indicators, market conditions, and upcoming earnings report before making any decisions. Despite the challenges, Nvidia remains one of the most promising stocks in the tech sector, with the potential to deliver significant returns for investors willing to navigate the current market environment.