NVIDIA: The Artificial Intelligence Go-To Stock
A Price Chart Analysis
NVIDIA is the company making the components that help to create the technology that makes artificial intelligence possible. There are other companies in the field but it’s this one that attracts Wall Street excitement lately.
That’s why it’s interesting that CEO Jensen Huang sold $42 million dollars worth of his shares this week along with selling by other board members. The sales were part of 10b5-1 plans set up in March and not unexpected.
“A 10b5-1 plan is a predetermined plan that can lock in items like the transaction date, exercise date and sell price before the transaction occurs. This can be useful for executives to eliminate doubt that the sales are coming due to weakened sales or material events,” according to Benzinga.com.
The unloading of shares comes after a huge run-up during the summer. Here’s the daily price chart:
From $140 at the beginning of the year to $500 by mid-August — nice run! It’s a problem, though, that the relative strength index (RSI, below the price chart) is negatively diverging from the price movement. Also, last week’s shot at $500 failed to hold.
NVIDIA is holding at the 50-day moving average (the blue line), a level at which Wall Street algorithms tend to sit up and take notice. A break below the 50-day could put an end to the magnificent 2023 rally. A target might be the huge gap up after quarterly earnings were released in late May — by coincidence, that’s where the 200-day moving average (the red line) now sits.
A larger long-term concern for the company is its reliance on Taiwan for materials needed in the manufacture of the sophisticated devices behind NVIDIA’s AI chips. Here’s an article entitled “China Claims Ownership Of Taiwan Strait. Canada Just Sailed A Warship Through It.”
That sounds serious — but I’m not an expert on the subject.
Not investment advice. For educational purposes only.
John, you’re the best, love your style. NVDA is priced for perfection and P/E ratios extraordinarily as high as exhibited NEVER last. It’s almost as if NVDA has become the latest ‘meme’ stock. Those in the know have been selling and the ‘newbies’ a couple shares at a time are being sucked in. I love the company’s products and where the overall industry is heading but it’s priced at a level that cannot be maintained.
Advice to NVDA, use the value of your stock to buy as many future competitors as you can. That’s where the true competition is; it’s going to be an entrepreneurial game going forward.
As always, thanks for the time you put into teaching the masses from your experience. It’s fun, isn’t it?