NVDA Melt Up
The Play
NVDA experiencing a surge in stock price since October 2022. On Monday 5/15/2023, call options @ $282.50 strike were trading between $2.80 - $3 mid-morning. Fast forward to the end of regular market trading today, Thursday 5/18/2023 call options @ $282.50 strike are trading around $32. $3 to $32 - Is there more room to run?! Let me pull out the crystal ball & shine it up a bit. The widening SMAs (20/200) are definitely suggesting a natural pull-back. Furthermore, I think it's important to ask the question - what happens after a melt-up? The Play is to trade the technicals long until a clear sign of pullback or reversal. Cut losses quickly - Ciao!
Reasons to Buy: Highlights
NVIDIA is a cash-rich company with a strong balance sheet. As of Jan 29, 2023, nearly $13.3 billion in cash equivalents well-covering the $9.7 billion in debt.
NVIDIA’s GPUs are rapidly benefiting from the proliferation of AI. By applying its GPUs in AI models, the company is expanding its base in other untapped markets like automotive, healthcare, and manufacturing, which will support its earnings and revenues.
Reasons to Sell: Highlights
The United States and China’s tit-for-tat trade war is a major threat to the company. This is because the United States is the largest semiconductor manufacturing country with China being its biggest importer.
The competition between NVIDIA and AMD has taken a meaningful turn. Previously, NVIDIA and ATI made graphics chips for the PC market. Later AMD acquired ATI and combined the CPU and parallel graphics chip into a single component. AMD is now making an effort to strengthen its position in the commodity graphics segment and CPUs for console gaming systems.
The acquisition of Xilinx by AMD has posed a new competitive challenge for NVIDIA in its fast-growing data-center chip market.
With around 69% of sales derived from foreign sales (outside the US) any unfavorable currency fluctuation & uncertain macroeconomic environment may moderate the company’s growth.
Things to look out for
Continued melt-up followed by a meltdown.
About the company
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence (AI) based solutions that now support high-performance computing (HPC), gaming, and virtual reality (VR) platforms.
NVDA experiencing a surge in stock price since October 2022. On Monday 5/15/2023, call options @ $282.50 strike were trading between $2.80 - $3 mid-morning. Fast forward to the end of regular market trading today, Thursday 5/18/2023 call options @ $282.50 strike are trading around $32. $3 to $32 - Is there more room to run?! Let me pull out the crystal ball & shine it up a bit. The widening SMAs (20/200) are definitely suggesting a natural pull-back. Furthermore, I think it's important to ask the question - what happens after a melt-up? The Play is to trade the technicals long until a clear sign of pullback or reversal. Cut losses quickly - Ciao!
Reasons to Buy: Highlights
NVIDIA is a cash-rich company with a strong balance sheet. As of Jan 29, 2023, nearly $13.3 billion in cash equivalents well-covering the $9.7 billion in debt.
NVIDIA’s GPUs are rapidly benefiting from the proliferation of AI. By applying its GPUs in AI models, the company is expanding its base in other untapped markets like automotive, healthcare, and manufacturing, which will support its earnings and revenues.
Reasons to Sell: Highlights
The United States and China’s tit-for-tat trade war is a major threat to the company. This is because the United States is the largest semiconductor manufacturing country with China being its biggest importer.
The competition between NVIDIA and AMD has taken a meaningful turn. Previously, NVIDIA and ATI made graphics chips for the PC market. Later AMD acquired ATI and combined the CPU and parallel graphics chip into a single component. AMD is now making an effort to strengthen its position in the commodity graphics segment and CPUs for console gaming systems.
The acquisition of Xilinx by AMD has posed a new competitive challenge for NVIDIA in its fast-growing data-center chip market.
With around 69% of sales derived from foreign sales (outside the US) any unfavorable currency fluctuation & uncertain macroeconomic environment may moderate the company’s growth.
Things to look out for
Continued melt-up followed by a meltdown.
About the company
NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit, or GPU. Over the years, the company’s focus has evolved from PC graphics to artificial intelligence (AI) based solutions that now support high-performance computing (HPC), gaming, and virtual reality (VR) platforms.
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