All Eyes are on Nvidia NVDA Stock

By: Nadeem_Walayat

$433 - EGFS 106%, 203%, PE 141, 201% of range, Fundamentals 3.9

The buying range for Nvidia is $322 to $262, which would take a spectacular collapse of 26% on the current price to the top of the range, never mind the waterfall of 40% down to $262, so the buying range is a tough ask which are a function of the fact of Nvidia's over valuation, as was the case during the 2nd half of 2021 there is no point in chasing after overvaluation a lesson learned by all those who held on during the roller coaster ride from $330 down to $110. So yes it is possible that Nvidia pulls another rabbit out of the hat and all we get was the drop to $400, that is the reality of the stock market, you don't always get what you want. And no, you can not invest with the benefit of hindsight!

This therefore begs the question can $262 actually materialise, a 40% drop! It's not just Nvidia that would take a tumble but there would be deep draw downs across the tech sector, for instance it would see AMD sub $86, TSM sub $80 and so on. Are such moves possible? Yes! S&P 4370 is currently perched at the half way mark of its expected 4610-4150 swing. Nvidia $322 would chime with 4150, $262 with sub 4100, maybe even as low as 4000! At this point I think 4000 would be a tough ask, instead 300 for an assault on 4100 is more probable than $262.

And then throw in consumer market dynamics into the mix namely their 4000 series has NOT BEEN GOOD VALUE FOR MONEY customers, over priced and in some versions crippled by memory bandwidth short cuts and well I am in no rush to get a 4000 series card unlike then 3000 series and similar for AMD CPU's, yes the 7000 series are good but it's not worth the upgrade from say a Ryzen 5950x to a 7950x for an approx 15% performance uplift in the benchmarks that in every day usage will not be noticeable, in fact as services such as MS Office move to the cloud then they become LESS demanding on hardware and thus extending the life-spans of preceding generations of GPU's and CPU's let alone the fact that we now do a lot of our daily tasks on our mobiles which is why the current valuations on the backs of AI are a bit of a mania, hence why I hold no Nvidia, it is in a mania as are most tech stocks to some degree. So I am not going to buy Nvidia just for the sake of it, it needs to present a value proposition by trading sub $300 and even then it won't be cheap! So whilst we all salivate at the prospects of sub $300 today, when the dust settles it could easily see sub $200 again! Which is what I was warning during 2021 when Nvidia was flying high at over $300, that I would start buying at $192 with my big buys reserved for sub $140 that came to pass. Today start buying $322 with bigger buys sub $272 scaling in all the way down to $192 once more.

The AI CLOWD wins!

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S&P

Targeting 4600 Mid Summer 2023 Top followed by correction to below 4150 into October 2023.

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By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2023 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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