What’s Next For Nvidia Stock And An AI Play To Keep On Your Radar

Benzinga

#1 Morning Stock Show To Get You Ready For The Stock Market Open, PreMarket Gainers, Earnings This Week, Economic Data & More!  Benzinga PreMarket Prep 8:00AM ET- 9:00AM ET BenzingaTV on YouTube.   What’s Next For Nvidia Stock And An AI Play To Keep On Your Radar. Craig Johnson, CFA, CMT is a managing director and chief market technician at Piper Sandler.

Transcript

00:00 Mr. Johnson, Chief Market Technician at Piper Sandler. Let's get right to it, Craig. Nice rally

00:08 here to end the month of August, heading into September. Jobs number, where are we at technically?

00:15 Craig Johnson So from our perspective, as we look at this

00:18 big picture of the market, we had recently raised up our year-end price objective, the 48.25.

00:24 Everybody still tells me why this market cannot work. And as I continue to keep looking at all

00:30 the charts, all the data, I continue to keep seeing things that are working. You guys were

00:34 talking about MongoDB, you were talking about SentinelOne. I would agree, I would pass on

00:40 SentinelOne at this point in time. But the chart of MongoDB, I kind of like how we've made the

00:47 bottom and we're starting to work our way higher. You were talking about Nvidia. Again, everybody

00:52 got freaked out about that earnings report where the stock sold off. But the truth is, when you

00:57 talk to some of the large institutions, they were really very, they had very full positions in

01:03 Nvidia. And they were using that as a liquidity event to move some stock. And the reason they had

01:08 to sell it, they own too much of it. I mean, there are rules and regulations with these big firms that

01:13 you can only own sort of X percent of the portfolio in your top five or 10 or 15 stocks. And they got

01:23 to a point in time where it's grown so much they had to trim it back. So I think that was sort of

01:28 a misleading sort of event that happened with Nvidia. I think the chart still looks great and

01:34 we still own it in our model portfolio. Greg, what about the fundamentals with Nvidia here?

01:39 Because it's such an interesting case of the valuation has scared people away of this stock.

01:45 But because the earnings are growing so quickly, the PE is actually coming lower as the price goes

01:51 higher. You rarely see that. I remember that happening with Apple back in like 2010 and 2011,

01:56 where the price simply couldn't keep up with the earnings growth because iPhone was growing so

02:01 rapidly. And we know what happened over the course of Apple over the next decade. The price just kept

02:05 going. Is this like another case where AI is just going to be so strong that this E is going to grow,

02:11 continue to grow? And this apparent valuation scares everybody away is going to continue

02:17 to potentially get cheaper? Does it have to be just AI or could some of the crypto business come

02:25 back for them too? It could be a combination of things. But what I would say about Nvidia is I

02:31 wouldn't try to overthink it. The chart still looks very constructive. Yes, you are very far

02:37 above a rising 200 day moving average, but you're nicely above your 50 and you're very nicely above

02:43 a 20 period moving average too. So as long as you stay above moving averages, I wouldn't try

02:47 to overthink it. I think we are all of us here recognize that the longer term outlook for Nvidia

02:54 and the end market still remain to be very healthy and very constructive. But, you know, one other

02:59 thing to think about too is with AI is take a look at the chart of ACN. So every... Accenture.

03:07 Yeah, Accenture. So every C-suite individual out there is like, what does AI mean for my business?

03:14 How do I think about in terms of a SWOT analysis, right? Strength, weaknesses, opportunities and

03:20 threats. And they don't know. They don't know what AI really means for the business. I think

03:24 there's going to have to be a lot of consulting projects getting done and Accenture certainly

03:30 could be a play in that. And you take a look at the longer term chart and it is definitely a chart

03:34 that's bottomed out and starting to turn higher and certainly doesn't trade at the lofty valuations

03:40 and arguments that you've got for Nvidia and other names. So this could be another kind of way to

03:46 play it, but really ties into the C-suite because they're all confused what AI means.

03:51 [BLANK_AUDIO]

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