Nvidia’s AI dominance is just getting started—With Q2 earnings around the corner, is NVDA the stock of the year? 🚀

Nvidia (NVDA) is set to release its earnings report on August 28, with expectations for strong financial performance, including revenue of $28.7 billion, operating profit of $18.8 billion, and EPS of $0.64. The company’s robust growth, driven by high demand for AI computing platforms, has positioned it as a key player in the AI industry. In Q1, Nvidia saw a 262% surge in revenue to $26 billion. The upcoming earnings report is highly anticipated, with significant implications for the broader AI market. Nvidia’s strong start to the year and its growing ecosystem suggest it will maintain a dominant position in the AI market. Stocks closely tied to Nvidia’s performance include Fabrinet (FN), Taiwan Semiconductor Manufacturing (TSM), Lam Research (LRCX), and ASML Holding (ASML).

Anticipated Financial Metrics

Analysts are forecasting impressive numbers for NVIDIA’s earnings report. The company is expected to generate revenue of $28.7 billion, with an operating profit of $18.8 billion. Earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... More (EPS) are projected to come in at $0.64, reflecting the company’s strong profitability. Additionally, research and development (R&D) expenses are forecasted to be $3.0 billion, underscoring NVIDIA’s ongoing investment in innovation and its commitment to maintaining leadership in AI technology.

The Broader Market Impact

The significance of NVIDIA’s earnings report extends beyond its own financials, making this week a critical one for the entire stock market. Recent earnings from tech giants like Microsoft (MSFT), Amazon (AMZN), and Google (GOOG) have highlighted a surge in enterprise demand for AI solutions, which bodes well for NVIDIA. The strong cloud numbers and AI data points from these companies suggest that the AI revolution is gaining momentum, with NVIDIA playing a central role as the primary supplier of AI computing platforms.

NVIDIA’s first-quarter performance set the stage for these expectations, with revenue skyrocketing by 262% to $26 billion, largely driven by accelerating demand for its AI solutions. The company’s ability to control costs has also been a key factor in its success, leading to substantial increases in operating profits. As of now, there are no signs of AI fatigue in the market, indicating that NVIDIA’s growth trajectory is likely to continue.

NVIDIA’s Dominance in the AI Market

NVIDIA’s strong customer reliance and expanding ecosystem position the company as a critical player in the AI market. Its GPUs are essential components in AI computing, and the company has built what can be described as a monopoly-like status in this rapidly growing sector. With the AI revolution still in its early stages, NVIDIA is well-positioned to benefit from the increasing demand for AI technologies across various industries.

One of the most intriguing aspects of NVIDIA’s business model is the multiplier effect associated with its products. For every $1 spent on an NVIDIA GPU chip, there is a significant impact on the broader tech ecosystem. This ripple effect underscores the company’s importance not only to its direct customers but also to the broader technology supply chain.

Key Correlations and Market Dynamics

The earnings report’s implications extend to several other tech stocks that have a strong correlation with NVIDIA’s performance. Fabrinet (FN), a major supplier to NVIDIA, is particularly noteworthy due to its high degree of trading correlation with the chip giant. Additionally, Taiwan Semiconductor Manufacturing (TSM), Lam Research Corporation (LRCX), and ASML Holding N.V. (ASML) are among the tech stocks most tightly linked to NVIDIA’s earnings results.

NVIDIA’s market capitalization has also reached new heights, making it the second most valuable company in the United States, just behind Apple (AAPL). This remarkable achievement reflects the company’s strategic positioning and the growing recognition of its critical role in the AI industry.

Insights

1. Nvidia’s Q1 performance exceeded market expectations with a 262% revenue increase.
2. The company’s strong growth is fueled by AI demand, highlighting its dominance in the sector.
3. Nvidia’s ecosystem and customer reliance are key to its continued market leadership.

The Essence (80/20)The Origins and Evolution of the 80/20 Principle The Discovery by Vilfredo Pareto In 1897, Italian economist Vilfredo Pareto uncovered a striking pattern in his study of wealth and... More

Nvidia’s upcoming earnings report is pivotal, potentially impacting the entire AI sector. Its expected strong performance reflects its leading role in AI computing, driven by surging demand and controlled costs. Key companies, including Fabrinet, Taiwan Semiconductor, and ASML, are tightly correlated with Nvidia’s market movements.

The Guerilla Stock Trading Action Plan

• Monitor Nvidia’s earnings report: Review key metrics like revenue, operating profit, and EPS to gauge AI market health.
• Consider investment opportunities: Nvidia’s strong performance could signal potential buys in related stocks like Fabrinet and Taiwan Semiconductor.
• Stay informed on AI trends: Nvidia’s growth is a key indicator of broader AI adoption.

Blind Spot

The market might underestimate the potential impact of supply chain challenges or global economic shifts on Nvidia’s future performance.

NVDA Technical Analysis (daily)

This chart of Nvidia Corp (NVDA) on the daily time frame shows several technical indicators and moving averages that provide insight into future trends.

The stock is currently trading above both its 50-day moving average (129.37) and 200-day moving average (87.68), indicating a strong bullish trend. The 50-day moving average is acting as a support level, with recent price action bouncing off it. The next resistance level appears to be around 145.00, where the stock previously faced selling pressure. Support levels can be identified at 125.00 (recent bounce) and 115.00, where there was consolidation in the past.

The Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... More (RSI) is at 59.93, which suggests the stock is in a neutral to slightly bullish zone. It’s not overbought, so there is room for upward movement before reaching overbought conditions.

The On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... More (OBV) is showing a slight upward trend, which confirms that buying volume is supporting the price movement. This is a positive sign for the continuation of the upward trend.

The Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... More is at 0.902, indicating that the stock is in the overbought zone. This could suggest a potential pullback in the short term, though in strong trends, stocks can remain overbought for extended periods.

The Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... More is in positive territory, indicating accumulation and further supporting the bullish case.

The MACDThe MACD indicator is essentially a momentum indicator that shows the relationship between two different moving averages of price. The MACD is the difference between the 12-period ... More Oscillator has a bullish crossover with the MACD line (7.10) crossing above the signal line (4.73) and the histogram turning positive, which indicates that the bullish momentum is increasing.

Time-Frame Signals:

• 3 months: Buy – The overall trend is bullish, supported by the price trading above both key moving averages. The MACD and OBV are positive, indicating strength.
• 6 months: Buy – The continuation of the bullish trend is likely as long as the stock remains above the 50-day moving average. The RSI is neutral, providing room for further upside.
• 12 months: Hold – While the long-term trend is positive, potential resistance around 145.00 may cause consolidation or pullbacks. Monitoring the stock’s ability to break through resistance is crucial for longer-term projections.

Future trends indicate continued bullish momentum with possible short-term consolidation or pullbacks, particularly if resistance levels are tested. Maintaining support above the 50-day moving average is key for the ongoing bullish outlook.

NVDA Technical Analysis (weekly)

This chart of Nvidia Corp (NVDA) on the weekly time frame shows a strong upward trend with key indicators suggesting continued bullish momentum.

The stock is trading well above its 40-week exponential moving average (97.49), 150-week exponential moving average (55.37), and the Anchored Volume Weighted Average Price (VWAP) at 73.20. These levels act as major support, reinforcing the long-term uptrend. The recent price action shows a bounce off the 40-week moving average, confirming this as a solid support level.

Support levels are identified at 110.00, where the price consolidated in the past, and at the 40-week moving average at 97.49. Resistance levels are around 140.00, where the stock recently peaked, and potentially higher at 160.00, a level that may be tested if the current trend continues.

The On-Balance Volume (OBV) shows a consistent upward trend, which is a strong confirmation of the bullish price action. This indicates that buying pressure is supporting the stock’s advance and may continue to do so.

Time-Frame Signals:

• 1 year: Buy – The stock’s strong upward trend is supported by the moving averages and OBV, with the price consistently making higher highs and higher lows.
• 2 years: Buy – As long as the stock remains above the 150-week moving average, the long-term trend remains positive. The current price action suggests that the uptrend is intact, and there is potential for further upside.
• 3 years: Hold – While the trend is positive, the stock may face resistance around 160.00 and could enter a period of consolidation or a pullback over a longer-term horizon. Maintaining the support levels and staying above key moving averages will be crucial.

Future trends indicate continued bullish momentum with potential resistance challenges ahead. Sustaining the support levels and moving averages is key for the ongoing bullish outlook.

Please note that past performance is not an indication of future results, and this article should not be considered as investment advice. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions 🧡.

Looking Ahead

As NVIDIA prepares to announce its earnings on August 28, all eyes are on the company to see how it will continue to shape the future of AI. With solid financial performance expected and no signs of slowing demand, NVIDIA remains a key player in the AI revolution. Investors and market watchers alike will be paying close attention, as the results could have far-reaching implications for the technology sector and the broader economy.