Nvidia stock surges 219% in 1 year; still buy-worthy? How to invest from India?
In terms of m-cap Nvidia is only behind Microsoft Corporation and Apple Inc. As per media sources, the current m-cap of Nvidia stands at $1.8 trillion while those of Apple and Microsoft are at $2.8 trillion and $3 trillion respectively.
Shares of Nvidia Corporation on the Nasdaq have been in the green since November 2023 on a monthly scale. Overall, they have surged over 78 per cent since November last year. Over the last one year, the stock has surged 219 per cent. Nvidia controls about 80 per cent of the high-end AI chip market, a position that has boosted its stock price this year after it more than tripled in 2023.
Also Read: Nvidia overtakes Alphabet to become third most valuable US company
Why has Nvidia stock surged?
As Mint reported earlier, Nvidia has been a top beneficiary of technology companies race to build AI (artificial intelligence) into their products and services, and the latest gain in its stock came a day after it ended a session with a market capitalization above Amazon’s for the first time in two decades.
Nvidia will release its quarterly earnings results on February 21. Analysts, on average, see the company’s January fiscal quarter revenue more than tripling to $20.37 billion, fueled by demand for its top-shelf AI chips, according to LSEG data. Analysts see its adjusted net profit surging more than 400 per cent to $11.38 billion.
“The world is heading towards AI, and big companies like ChatGPT, Google, and Microsoft are aggressively working towards it. But all of them are heavily dependent on Nvidia’s GPU (graphics processing unit), so we are seeing massive outperformance in Nvidia’s share price,” said Parth Nyati, Founder, Tradingo (A part of Swastika Investmart).
“AMD is the second-biggest producer of GPUs, but it is not anywhere near Nvidia. And Nvidia has a kind of monopoly because GPU is a deep technology that is difficult to break down, where AMD is struggling,” Nyati added.
Manish Chowdhury, Head of Research at StoxBox pointed out that the company’s GPUs are known for their exceptional parallel processing capabilities, making them ideal for training and inference in AI algorithms. This has driven the demand for GPUs in various industries, including healthcare, finance, gaming, and autonomous vehicles.
Still buy-worthy?
While concerns over the valuation of the stock have been growing, experts observe the stock has a huge growth potential since AI is still in its early stages and is growing swiftly.
“Some investors are concerned about the valuations, as it has outperformed in recent times and most of the things are already factored in, but we know that AI is in its early stages and there is a big opportunity there. Nvidia’s CEO Jensen Huang highlighted in an interview that a trillion dollars of installed global data centre infrastructure will transition from general-purpose to accelerated computing as companies race to apply generative AI into every product, service, and business process,” Nyati said.
Chowdhury believes with strong earnings growth and an expanding customer base, Nvidia is positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and the Internet of Things (IoT). However, Chowdhury added that investors need to be cautious of the risks as well which include a loss of market share due to the glut of AI chips in the market and the company’s supply not matching up to the demand for chips.
If we consider the technical factors, KKunal V Parar, VP of Technical Research and Algo at Choice Broking observed that the stock consistently maintains its position above all long-term moving averages on the daily chart, indicating a favourable trend in the stock’s performance.
Additionally, it exhibits a clear upward trajectory within a rising channel formation on the daily chart, indicating a bullish trend in the stock’s movement.
On a weekly chart, Parar pointed out that the stock has successfully broken out of its flag formation, resulting in a substantial upward movement equivalent to the length of its pole.
The weekly momentum indicator, RSI, is currently in the overbought zone, signalling potential exhaustion in the stock’s momentum in the near term. Considering the technical structure described above, further upside movement is anticipated, with potential price targets ranging from $789 to $1,023. Downside support is expected at $663,” said Parar.
How can Indian investors invest in Nvidia?
One can invest in US stocks from India either by opening an overseas account with a domestic or a foreign broker or one can choose the mutual fund route also.
Nyati said Indians can invest in the US stock market through domestic brokers who collaborate with US stockbrokers. This involves opening an international trading account and submitting necessary documents. Alternatively, one can opt for international brokers with a presence in India. One must research costs and terms before selecting the best broker for purchasing US stocks from India.
Chowdhury said to invest in US stocks from India, investors can adopt two ways vis-a-vis opening an overseas account with a domestic/foreign broker or investing through mutual funds or ETFs.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 16 Feb 2024, 11:25 AM IST
