Nvidia Inc. (NVDA) jumped more than 15% on Wednesday after posting solid first quarter financial results. The chip-maker reported revenue that rose 49.2% to $1.94 billion – beating consensus estimates by $30 million – and earnings of $0.85 per share – beating consensus estimates by $0.18 per share. The performance was driven by robust demand for artificial intelligence applications where its GPUs offer significant advantages over CPUs.
The move surprised many analysts that had become concerned over the stock’s meteoric 300% rise since the beginning of last year. Jim Cramer – the CNBC personality and TheStreet contributor – suggested earlier this week that he would be cautious when investing in the stock, saying that it’s ‘elevated versus its comparisons’. Many analysts had also downgraded the stock after its significant price increase in such a short period of time.
From a technical standpoint, the stock broke out from a descending triangle (caused by the bearish mood) to test its all-time highs of $120.92 and upper trend line resistance. Technical indicators suggest that the stock may have moved into overbought territory with a relative strength index (RSI) of 74.67, but the moving average convergence-divergence shows ongoing strength as it broke past the zero-line into a positive uptrend for the first time in months.
Traders should watch for a breakout from its all-time highs to break into new territory or a consolidation around its R2 resistance at $117.31 before such a move. In the meantime, the market will be closely watching the company’s ongoing expansion into artificial intelligence and data centers as a source for further upside over the coming quarters.
Charts courtesy of StockCharts.com. Author holds no positions in the stock(s) mentioned except through passively-managed index funds.
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