NVDA: Riding the AI Hype Wave to $250!

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NVDA just hit its all-time high last friday, reaching my swing trade target. While I took profits as part of my routine discipline, I still believe there's plenty of upside left, with $250 in sight.

Here's why:

Strong Fundamentals: Nvidia consistently beats earnings expectations, with EPS climbing from $0.11 to $0.68 over recent six quarters. This growth trajectory shows no signs of slowing down, reinforcing the stock's upward momentum.

Analyst Confidence: Out of 65 analysts, 51 rate Nvidia as a "Strong Buy," with none suggesting a sell. While the average price target is $149.81, the highest target of $202.79 shows strong backing from the financial community.

Bullish Technicals: Weekly and daily moving averages, from the 10-day to the 200-day, are flashing "Buy" across the board. Add to that a myriad of other indicators in different time frames (basically, you name it), and it’s signaling "Buy." In short, everything is pointing towards continued bullish momentum and potential for further gains.

Market Leadership: Nvidia's dominance in AI and high-performance computing continues to grow. Its cutting-edge AI chips, as well as its strong presence in data centers and gaming, put the company in a prime position to capitalize on key growth sectors.

And finally, why am I more bullish than even the highest analyst target? Well, it’s simple: the hype. Nvidia is at the forefront of the most exciting and disruptive technologies today—AI, data centers, gaming—you name it. The market's enthusiasm surrounding these sectors is growing exponentially, and Nvidia is perfectly positioned to ride that wave. Sometimes, fundamentals and technicals align with pure market excitement, and that’s where I see Nvidia pushing past those conservative estimates toward $250.


Disclaimer: This content is for informational and educational purposes only. It should not be considered as financial or investment advice. Trading stocks involves risk, and you should perform your own research or consult with a professional before making any investment decisions. Past performance is not indicative of future results.

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In this post, I kept it brief, focusing less on the fundamentals and only briefly mentioning Nvidia's strong financial position. Now, with this update, I want to dive deeper into the key factors that back my bullish medium-term outlook:

First, concerns about production delays for Nvidia's Blackwell hardware are diminishing, as partners have confirmed that delivery schedules are on track. Additionally, worries over competition have eased, especially after Advanced Micro Devices' recent AI chip launch failed to impress. Even the potential export restrictions to China and other markets have barely impacted Nvidia's growth trajectory.

Looking at the broader tech sector, the need for the MAG-7 to ramp up spending on AI hardware to avoid losing ground is an undeniable catalyst. This AI race could provide strong support for the broader market, as staying relevant in today’s world of constant, dynamic change demands these investments.

Some might point to Nvidia's high P/E ratio as a cause for concern, but the relevance of this metric has evolved. The market has changed, and we must adapt our trading strategies accordingly. I know Nvidia is the definition of a crowded trade, but that's exactly what fuels my optimism. As I mentioned earlier, a significant part of the gains ahead will be driven by market hype.

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After Taiwan Semiconductor beat profit expectations and forecast strong Q4 revenue, fears of decelerating demand in the AI sector have diminished. As a result, NVDA is up 2.7%, moving back near its highs, demonstrating a strong and positive outlook.

A quick note about the nature of this trade: I’m positioning for the medium term, planning to hold this for several months without setting stops. I expect to close it sometime in 2025, so this is more of an investment than a trade, and updates here will be infrequent.

However, if you’d like to see my frequent takes on NVDA, follow me! I’ll continue to trade swing positions, and many of those will be posted in this community. Keep in mind that those trades will not be related to this investment.