Regular readers may recall that I last addressed Nvidia (NVDA) on February 23rd in response to earnings. The stock opened the day at $230, and I made a disciplined sell off what I said was my target of $216 in earnings. I had set a target of $270 on the balance of my long position at that time to get the stock out of the way and wrote to you that I will come back when the charts tell me something.
Well, the stock has actually moved mostly sideways since then and I’m back to update my view.
Readers may also recall that Nvidia reported fourth-quarter results that underperformed expectations and the stock mainly focused on CEO Jensen Huang’s focus on the coming era of artificial intelligence and his firm’s role in it. used to concentrate, which was accomplished in the recent past. ,
That brings me to Monday. Microsoft (MSFT), another Surge name, revealed a new virtual machine using Nvidia’s H100 Tensor Core GPUs as its guts/brains. These machines will be able to allow customers to build an infrastructure that can scale to size for any artificial intelligence task, given that large language models and GPUs with sufficient training are involved. This machine, now known as the ND H100 v5 VM, will use anywhere from eight to literally thousands of Nvidia H100 GPUs to get the job done.
Then I saw other news. The US Army is looking to add $77.5M to continue developing its IVAS (Integrated Visual Augmentation System) with Microsoft on top of the $91.3M already committed to the purchase if successful. These are futuristic goggles that post information on a screen only visible to the infantry soldier of tomorrow, while also incorporating features such as night vision.
These are futuristic goggles that post information on a screen only visible to the infantry soldier of tomorrow, while also incorporating features such as night vision. I don’t know who is providing the GPUs for these futuristic goggles for sure, but I really can’t imagine Microsoft doing so or would be successful relying on anyone other than Nvidia for the necessary chips.
It’s interesting as an investor. As an infantryman, I prided myself on being part of the environment and being as invisible as possible using only my wits and whatever I could find or cover myself with. That side of me cries.
Readers will note that the stock has developed a tight basing pattern after the gap up opening on 23rd February. Its going sideways for almost a month but sideways while most of the market is selling around NVDA and some other cms.
Readers will notice that the pitchfork model we prepared for you last month remains intact. The central trendline hasn’t really been a factor, but the daily MACD (moving average convergence divergence) is showing signs of a headwind, while the RSI (relative strength index) has turned a bit bearish. Let’s zoom in…
Readers will note that NVDA tested its 21 day EMA (Exponential Moving Average) last night as it did on February 22nd. This is a level in dollar terms that the stock tested in early March. The NVDA passed both of those tests. What is not in favor of the stock? It’s trading at 51 times forward earnings and that unfilled difference is still making the stock a call.
Our basking pattern has a lid. He is our pivot. The stock has a support which is being tested. Should there be a crack in that spot, then I think we probably see the gap fill, so we know how far any sell off potential is from a technical perspective.
– Target Price: $280 (up from $270)
– Spindle: 244
– Add: Low to 21 Day EMA ($226)
– Panic: Breaking Monday’s low ($222)
(Microsoft holding Action Alert Plus Members Club, Do you want to be alerted before you buy or sell MSFT? Learn more now.,
Receive an email alert every time I write an article for Real Money. Click “+Follow” next to my byline for this article.