Growth Stocks: NVIDIA

Nvidia Corporation (NVDA.US), a multinational company specializing in the development of graphics processing units (graphics cards) and integrated circuit technologies for businesses, personal computers and mobile devices has been showing a market performance totally contrary to the supply problems of semiconductors and microchips.

Brief perspective of the Company and recent events

One of the factors that has made this company, still 100% exposed to the problem, totally desensitized, is the reason for the high demand that has been in recent quarters for its graphics cards that stand out as leaders in the personal computer market primarily for video game use. But the latest series of graphics cards called RTX 30, characterized by being the top of the range of the company, stopped manufacturing them because they were used to achieve the necessary cryptocurrency mining power. You are recently considering re-releasing that series of graphics cards with a mining software limitation. Why? Well, because that of graphics cards is intended for the field of video games while the demand for cryptocurrencies has distorted the target customer, in addition to creating a speculative secondary market where graphics cards are sold several times more expensive than their original price.

Close to lead the sector

Regarding its upcoming results, the company has officially stated that the results for the quarter could beat the outlook they had for the first quarter of fiscal 2022. While we have recently learned that the United Kingdom is against the acquisition process that NVIDIA is leading out on ARM and what the biggest hardware deal of the last decade would mean by eliminating one of NVIDIA’s main competitors in the UK. One of the contexts in which the British government opposes this operation is because it suffers from certain characteristics of sensitivity about national security and that it could delay the agreement until the next year 2022

NVIDIA’s efficiency in terms of economies of scale can be seen when compared to its competitors. Intel, which earns five times the revenue and has 10 times as many employees, has a market capitalization almost 30% lower than NVIDIA, the same situation happens with Broadcom which has just under twice the revenue and a few more employees while its market capitalization is almost half that of NVIDIA. Although we put AMD within the comparables, it really is complementary since it is mainly dedicated to processors and having half of the income and more or less the same workers, its market capitalization is 25% of NVIDIA’s market capitalization.

Technical vision of the stock

The stock has been trading in a lateral range since the end of August, in these last 8 months the company practically at the end of the journey had two false breakouts, one bullish and one bearish, to continue trading again within the range and finally, Last week, decisively breaking the resistance marking a new all-time high at $ 648.33 per share.

Using the last major correction from $ 613.26 to $ 462.24, Fibonacci projecting the retracement expansion to 161.8% of the movement, they project an “abc” momentum with a target of $ 730.12 per share. Recent events around the UK’s rejection of the ARM acquisition could accelerate the move towards the “b” retracement of the construction momentum.