Last week, NVIDIA shares moved to a new phase of growth and were able to update historical highs. On August 20, the quotes rose by 2.6% during the main trading session, and lost 0.4% on the postmarket.
In total, since the beginning of the year, the shares have risen by 73.4%, which very much bypasses the dynamics of the semiconductor index and the S&P 500. Over the past 5 years, NVIDIA shares have grown by more than 1300%.
Will the shares be able to grow further? Let's look at the latest events in the company and the near-term prospects of the shares.
Recent events
The acquisition of ARM continues. The EU intends to conduct an inspection in early September. First, the regulator will conduct a 25-day preliminary review of the request. Then, if NVIDIA does not make concessions, a 90-day full-scale investigation will be conducted.
The UK has already expressed its concern about the takeover, so its approval is still expected. The regulators of China and the United States still have to give their "good". There are also no clear deadlines for the completion of the transaction now. Earlier, NVIDIA promised to complete the transaction in March 2022, now this deadline may be shifted to September 2022.
While this issue does not particularly affect the shares, investors are focused on current activities. The approval of the deal will be a strong driver for continued growth. If the takeover fails, the shares may suffer, but in the long term it will not get worse, since NVIDIA has many drivers for growth.
The largest GPU-based Polaris supercomputer at the Argonne National Laboratory of the US Department of Energy will run on the NVIDIA accelerated computing platform.
Such contracts improve the attractiveness of the company and confirm its technological superiority. This may have a positive impact on the main business segments due to the expansion of market share. First of all, this applies to the already extensive data center market.
What are the prospects
The pandemic stimulated the demand for semiconductors, so the 2 main NVIDIA segments were able to significantly increase revenue over the past year. This applies to sales of products for the video game market and data centers.
Both directions are able to continue growth in the long term, but the company has other opportunities:
- Development of cloud gaming
- Increasing the scale of your car segment
- Improvement and implementation of artificial intelligence technologies
- It is entering new markets like robotics, automated factories and other advanced technologies
Technical picture
NVIDIA shares have entered an active growth phase since mid-March after a long sideways consolidation. At the beginning of July, there was another pause and correction, which ended last week.
At the moment, the price is above EMA21 and buyers are starting to test $230, overcoming the level from the bottom up will open the way to $240 and higher.
At the same time, the daily RSI has already come close to the overbought zone, and the weekly one is already there. The MACD curves are directed upwards, which signals the continuation of the growth phase. If there is a rebound down from $230, then the shares can go sideways. The situation will become negative when going down below $210, which in the future may turn into a full-fledged correction below $200.
Is it worth investing
The long-term outlook remains moderately positive due to technological superiority, continuing high demand against the background of a shortage of chips and entering new markets and strengthening positions in the current ones.
In the short term, the growth may still continue, but entering a position right now looks risky in view of the beginning of overbought stocks from the technical side. If the investor already had a position, it makes sense to partially fix the profit, otherwise the shares should be considered from a speculative point of view for a short period.
The growth may support the overall positive mood in the US market due to the local easing of tension on the issue of curtailing the QE program. This issue remains and is postponed, so investors can still take risks, which will support the growth of shares in the short run. The recent strong financial report may also support the upward trend.