Nvidia (NASDAQ:NVDA)shares are roaming around their all-time high of $208.75, currently at $208.16 at the time of writing. Recent events of a stock split of 4-to-1 and positive earnings set this stock up well for a break of this high.
Stock splits are generally received well. It doesn’t make a change to the fundamentals of the stock, but makes shares cheaper for investors to buy. Companies like Amazon have much more expensive shares, which make it harder for traders with less capital to add diversification to their portfolio. But shares of Nvidia now being around $200 make them easier to buy. The shares rose 4.3% in July on the day of the split.
All-time high on brink?
An all-time high breakout is also something that draws the attention of traders. Momentum shifts when a stock reaches this new territory. These new conditions are favourable as there is no oversupply in the form of traders selling at a loss or break-even. Also, resistance levels disappear, which mean less targets for short sellers to lookout for.
The sentiment of the stock is bullish. A rally was seen from May to July, which was met with strong daily volume to support this move. In line with this, the current break out has seen double the volume of the 100 day average.
The earnings report was good news for shareholders. Nvidia reported quarterly earnings of $1.04 per share, as well as quarterly revenue of $6.51B (up 68% from a year earlier). This beat the estimates of $6.33B. They also forecast the next quarters revenue to be $6.5B.
How high can it go?
Nvidia is a growth stock in the artificial intelligence sector, which is set to boom in the coming years. We already know of household AI names such as Siri from Apple, and Alexa from Amazon. These are relatively simple forms of AI systems, that looked prepped to continue developing and making human life easier. It is not only our day-to-day lives that will benefit from AI. Companies will be major customers of AI to help efficiency and reduce human error within their business.
With Nvidia making 360% returns since the pandemic lows, it has made itself a staple name for any investors within the technology sector. But this won’t be a smooth ride. Growth stocks are more volatile than larger value based companies. This can be a benefit to you if you look to capitalise on buying pullbacks and selling into rallies to really compound your position in the stock.
In my opinion, Nvidia is a stock worthy of a buy for a long term position within this exciting sector.