Nvidia Rises In Big Week For Big Tech, But Is Nvidia A Buy Now?

Artificial intelligence chip leader Nvidia (NVDA) hit an all-time high last week. But are air pockets headed its way as big tech report earnings? Investors paying attention to the fourth pillar of the IBD methodology are wondering, should they buy the stock now?

Shares are rising in a buy zone above a buy point of 140.76, IBD MarketSurge analysis shows. Meanwhile, analysts are bullish. On Thursday last week, analysts at Bank of America raised their price target on Nvidia to 190 from 165 while maintaining a buy rating.

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But where does the stock stand with respect to the thousands of other stocks in the stock market? Nvidia stock continues to outperform and has an ideal EPS Rating of 99, while the stock holds a Composite Rating of 99 as well. The stock is on the IBD Leaderboard, IBD SwingTrader and IBD 50.

But funds have been wary of buying the stock lately. The Accumulation/Distribution Rating, which measures fund purchases over the last 13 weeks, is just D on an A+ to E scale.

Magnificent Seven Earnings Ahead

Meanwhile, earnings from the Magnificent Seven leaders could move Nvidia stock. Tesla (TSLA) reported third-quarter results at market close Wednesday.

Tesla (TSLA) announced it had "increased AI training compute" by over 75% year over year in the third quarter. The EV leader buys its chips from Nvidia and is investing in AI to train its driver assistance feature and humanoid robots.

Nvidia stock could move when Alphabet (GOOGLE) reports on Oct. 29 and Microsoft (MSFT) and Meta (META) on Oct. 30.  Apple (AAPL) has scheduled its September-quarter results on Oct. 31 as has Amazon (AMZN). Investors also await Nvidia's fiscal third-quarter results on Nov. 20.

Recent news shows demand for its AI chips remains high. Chief investment officer at UBS Global Wealth Management noted that "big tech's combined capex [capital expenditure] spending of $218 billion this year and another $254 billion in 2025 bodes well for the AI investment thesis."

Meanwhile strong AI data center demand helped Vertiv (VRT) beat earnings estimates for its September quarter.

On Wednesday, Chief Executive Jensen Huang said that a design flaw in its next-gen Blackwell chip had been fixed. Earlier, yields were low but AI chip maker Taiwan Semiconductor (TSM) helped " recover from that yield difficulty and resume the manufacturing of Blackwell at an incredible place."

After A Volatile Week, What Now?

Nvidia stock cleared a trendline entry near 139.60 in early trades Thursday last week after Taiwan Semiconductor profits surged 54.2% year over year. Taiwan Semi is a big supplier of AI chips to Nvidia and Apple (AAPL).

But shares fell nearly 5% after chip-gear leader ASML (ASML) disappointed investors with its outlook. 

Shares also fell on news that the company's advanced chips exports could be up against more restrictions. Sales restrictions on Nvidia's AI chip exports to 40 countries are already in place and may now extend to the Persian Gulf. According to reports, discussions on new limits are in an early stage.

Nvidia Market Cap Could Exceed Apple's

A strong rally is helping Nvidia catch up to Apple's (AAPL) market capitalization. That would make it the biggest stock by market cap — a crown Apple holds now.

Nvidia's market cap is nearing $3.5 trillion vs. Apple's $3.55 trillion.

Foxconn Plans Server Capacity Boost

Nvidia shares also rose amid reports that Apple iPhone maker Foxconn plans to increase server capacity to meet "crazy" demand for Nvidia's Blackwell chips. Foxconn Chairman Young Liu added the company plans a capacity of 20,000 of its GB200 NVL 72 servers in 2025.

The GB200 NVL 72 server is a liquid-cooled system. It connects 36 central processing units and 72 Blackwell graphics processing units to improve inference tasks.

But Foxconn faces a "hiccup" as Nvidia is likely to ship its newest artificial intelligence chip later in the fourth quarter rather than earlier.

Earlier, the stock fell amid reports from Barron's that China was trying to boost local AI chipmakers and urging local companies to avoid Nvidia chips. China accounted for 11% of Nvidia sales in the first half the fiscal year ending in January.

Nvidia Stock: AI's Total Addressable Market

In September, consulting firm Bain said the total addressable market for AI hardware and software will grow 40% to 55% for at least the next three years. Demand for Nvidia's next generation graphic processing units GB200 is expected to reach 3 million in 2026 vs. 1.5 million for its H100 units in 2023.

White House Meeting

In September, shares climbed above the 50-day moving average amid news that Nvidia CEO Huang and his counterpart at OpenAI, Sam Altman, met officials at the White House to discuss AI infrastructure spending. According to reports, Alphabet (GOOGL), Amazon.com (AMZN) and Microsoft (MSFT) executives were also present. The White House announced an interagency task force to accelerate permissions for setting up data centers.

However, news that companies may be diversifying and looking for other chips likely weighed on Nvidia stock. According to Barron's, Saudi oil behemoth Aramco is planning on using chips made by a startup Groq to offer "AI computing power to local companies."

Analysts at Bernstein said that after its phenomenal growth, sustainability is the main question Nvidia faces, but the "time to worry is clearly not now."

On Sept. 3, Nvidia fell sharply below the 50-day moving average and saw its largest one-day market cap loss for any U.S. company, according to Dow Jones Markets Data. 

Earnings From AI Giants Moves Nvidia Stock

Results from other AI leading companies have influenced the stock. Memory chipmaker Micron (MU) cited robust AI demand, which gave Nvidia stock a lift while Oracle (ORCL) Chairman and Chief Technology Officer Larry Ellison said his company is building a data center with "acres of Nvidia GPU clusters for training large language scale AI models."

But Broadcom (AVGO) results weighed on Nvidia. Broadcom's sales and earnings beat estimates but its sales outlook disappointed. 

The stock fell 6.4% after earnings on Aug. 28 even though Nvidia beat analyst estimates. 

Nvidia's Second-Quarter Results

In August, Nvidia reported earnings that beat Wall Street views. Sales of $30.04 billion were higher than $28.7 billion analysts expected and came in 122% ahead of the year-earlier quarter.

Earnings also came in above views of 65 cents at 68 cents per share. That was 152% higher than the prior year. The artificial intelligence chip leader also guided higher for the current quarter with sales of $32.5 billion vs. views of $31.7 billion. 

Earnings have moved Nvidia stock in 2023 and 2024 and that is shining proof of why fundamental performance is one of the pillars of the Investor's Business Daily methodology. In 2023, Nvidia had a huge 239% run.

But fundamentals make up just one of four IBD pillars of investing — the others are a stock's technical strength, which indicates the stock's performance vs. other stocks, the market direction and risk management.

Huang sold $580 million of Nvidia stock from June 14 through Aug. 9, based on a trading plan.

AI Products Drive Growth

Nvidia's graphic processing units help accelerate computing in data centers and AI applications. The company was a pioneer in graphics processors 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 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 five most recent quarters.

Nvidia stock still boasts a strong Relative Strength Rating of 98 from Investor's Business Daily. 

Is Nvidia Stock A Buy?

Chart signals and technical measures can help investors assess whether Nvidia stock is a buy now.

Nvidia is extended from the 50-day moving average.  Shares are also extended from an alternative entry at 131.26. But the stock hit an all-time high and is just above a buy point of 140.76. That makes Nvidia a buy. But investors should keep an eye on earnings from Apple, Amazon, Alphabet, Meta and Microsoft over the next few days.

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