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Jump on Nvidia’s Pullback: The AI Powerhouse Set for a Comeback

Long
BATS:NVDA   NVIDIA Corporation

After rising more than threefold, Nvidia (NVDA) stock is pulling back, as uncertainty rises, and many investors take profit.

However, while it may be a while before shares triple in price again, much suggests that this top AI chip play could again perform strongly in 2024.
With this, instead of cashing out/sitting on the sidelines, you may want to enter/add to a NVDA position instead.
Why Enthusiasm is Sliding for This AI Chip Winner

Nvidia is far and away the leading supplier of chips for the generative artificial intelligence market. Booming demand for these chips has resulted in sales rising by triple-digits on a year-over-year basis, with sequential sales growth set to keep rising by a double-digit pace.

Earnings have increased by an even greater extent. Analysts forecast Nvidia’s earnings this fiscal year (ending January 2024) to rise nearly sevenfold compared to FY2023. So then, instead of having continued enthusiasm for NVDA stock, why is the excitement simmering down? Two uncertainties keep weighing on shares.

The first concern is uncertainty surrounding interest rates. If the Federal Reserve lowers rates next year, that’s good news for both chip demand, and for Nvidia’s valuation. However, if rates remain at elevated levels, this could slow down a rebound in non-AI chip demand, affect future AI-related chip sales growth, and limit the extent in which NVDA’s earnings multiple could re-expand.

Technical Analysis
Nvidia Stock movement is indicating a head and shoulder trend with the trough and crest touching the resistance and support level.

NVDA is trading near the top of its 52-week range and above its 200-day simple moving average.
Investors have been pushing the share price higher, and the stock still appears to have upward momentum.

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