Nvidia Stock Must Break 149.77 to Pave Way for Further Rise

NVIDIA Corp (NASDAQ:NVDA) engages in the design and manufacture of computer graphics processors, chipsets, and related multimedia software. It operates through the following segments: Graphics Processing Unit (GPU) and Compute & Networking. Nvidia designs and sells GPUs for gaming, cryptocurrency mining, and professional applications; the company also sells chip systems for use in vehicles, robotics, and more.

Nvidia's Compute and Networking business segment, which includes artificial intelligence (AI) , is the company's biggest revenue generator. The Graphics business segment is Nvidia's second largest revenue generator.

• Put/Call ratio for Nov. 22 expiry is 0.7866% more calls than puts which suggests the following three scenarios:
  • With Put/Call ratio is around 0.80-0.72 for the next 2 upcoming expiries suggest that the traders are mildly bullish.
  • Earning miss or lower guidance could trigger a short-lived sell-off. As the veteran tech investor won’t sell - regardless of earnings.
  • Earning and guidance in line or better than estimates trigger a sharp rally.

Key Highlights:

• Analysts expect the chipmaker to deliver revenue growth driven by demand for artificial intelligence infrastructure, with record data center sales.
• All eyes will be on the updates Nvidia’s Blackwell AI chip shipments.
• Big Tech’s AI spending continues to accelerate at a pace not seen in the past many years. Microsoft Corporation (NASDAQ:MSFT), Amazon.com Inc (NASDAQ:AMZN), META (NASDAQ:META) & Alphabet (NASDAQ:GOOGL) have set a huge CAPEX for AI in 2025.
• NVDA is a cash-rich company with a strong balance sheet as its total debt to total capital of 0.16 is significantly lower than the industry average of 0.30.

Technical Analysis Perspective:

• NVDA has been hovering insider a symmetrical triangle from April 2024 to early October 2024.
• Typically, these types of triangles form 5 points.
  • Point 1 = April 15, 2024, to June 21 (from 75.61 to 140.76)
  • Point 2 = June 17, 2024, to August 09, 2024, (from 140.76 to 90.69)
  • Point 3 = August 09, 2024, to August 30, 2024, (from 90.69 – 131.26)
  • Point 4 = August 30, 2024, to September 06, 2024 (from 131.26 – 100.95)
  • Point 5 = September 06, 2024, to October 07, 2024 (from 100.95 to 125) breakout point.
• The upside target of this triangle is 185 – 195 in the coming weeks to months.
• NVDA needs to break the recent high 149.77 high pre-earnings or during the earnings volatility to pave the way for further rise.
• A failure to break 149.77 would suggest a dip to 139 -137 support zone.

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• NVDA 19 years seasonality suggests that it closes 6.9% higher in November 80% of the time.

Conclusion:

NVDA has been in an uptrend since October 2022, a breakout of a bullish symmetrical triangle is adding fuel to the current rising trend and earnings could be a catalyst force. Fundamental and technical parameters are supporting additional rallies. Let’s see how the earnings and guidance play later this evening.

Written By: Ali Merchant