Raising Cash and ... Adding to Nvidia
Why I'm adding to the tech stock as the chips are ... down.
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I had raised a bit of cash on Friday. Not a ton, but I felt foolish, as If I were panicking. Apparently, I should have raised more cash than I did.
One thing I have done well since the 10-for-one split, is trade Nvidia NVDA. So far so good. Some people consider an eight-hour workday to be "full-time." If that's true, I'll hit full time for today in a couple of hours. We know that typically stocks run up into splits and then sell off after said split. It took Nvidia a while to get there. I thought that maybe, just maybe.... I would not have to sell any Nvidia.
So much for that fleeting sense of joy. Fortunately, because I manage risk according to a code of time-honored discipline and not with my heart, I took some NVDA off as the stock broke $125, $120 and then $110. Not that I don't make mistakes, I most certainly do. I came in at zero-dark thirty on Monday morning still long one third of the Nvidia shares that I had gone into the split with.
This morning, I just added my first lot of NVDA since having made those sales. Down 10.2% in premarket trade. I may add some more as it has now traded through that level. I may not. We'll see how the day progresses. Nvidia does not report until August 28th, by a wide span of time, the final "Mag 7" stock to post their quarterly digits.
The AI Lay of the Land
We know -- because pretty much the leadership of (formerly?) several mega-cap techs had told us that their capital spending on generative artificial intelligence hardware has increased and will increase going forward -- that Nvidia will likely impress us with the quarter to our rear once again. It won't be easy, though, just because Microsoft MSFT, Apple AAPL, Meta Platforms META, Amazon AMZN and Alphabet GOOGL are all customers and are all spending.
There are several items that will very likely impact any forward-looking guidance Nvidia was set to provide. We'll look for an unadjusted earnings per share of around $0.62 on more than $26 billion from Nvidia for the completed quarter. That will end up looking like 125% earnings growth on 110% revenue growth. Huzzah! Guidance may be a riddle.
Wait. There is also an apparent stock market crash under way. The U.S. and most of the developed world have allowed themselves to drown in debt. Nvidia came clean on Saturday about some last-minute design flaws in what were to be the company's latest, AI-capable graphics processing units built upon the Blackwell architecture. We're talking about a delay of maybe three months, maybe more. All mega-cap tech will be impacted. Is this Lisa Su's golden opportunity at Advanced Micro Devices AMD. I wouldn't doubt it.
Words on The Street...
Citigroup analyst Atif Malik, who's rated five stars by TipRanks, on Monday morning cut his fiscal 2025 estimates for Nvidia-generated revenue by 5%, but left fiscal 2026 alone. Malik did reiterate his "Buy" rating and his $150 target price, but removed NVDA from his 30-day catalyst watch, even with earnings looming.
Bank of America's Vivek Arya, also rated at five stars, reiterated both his "Buy" rating and his $150 target and does not see potential impact to Nvidia financially due to this delay until the fourth quarter, and any sell-off related to that delay would be a buying opportunity.
Elsewhere, perma-bull four-star analyst Dan Ives of Wedbush spoke out for all of tech and said that he does not see the bull market in tech as over and that this was a broad buying opportunity. I'll take that with a grain of salt, but the first two mentions are a bit more discerning.
The Chart, the Gap Fill
Readers will see that as NVDA broke out that flat base and went on to build that now obvious double-top reversal pattern, the stock left an unfilled gap between $96 and $101 in its wake. Now, the stock sells off with a $118 pivot. The stock has surrendered its 50-day simple moving average, as its Relative Strength Index starts to move lower and its daily moving average convergence oscillator has already fallen out of bed.
Why did I add some NVDA back to my position this morning? Simple. That gap from mid-May has been filled at least during non-regular hours. Does that mean NVDA is close to the bottom? That I do not know. The 200-day simple moving average beckons. At that level, I would of course add some more. Is Nvidia expensive? It did go out on Friday at 41-times forward earnings. Even with the stubbed toe, full-year forward looking earnings likely will not change, though NVDA's price-to-earnings ratio already certainly has. It looks like just 1% of the float is held in short positions.
So, Die Hard the Hunter?
On the hunt. Scary? Of course it's scary. In. Out. Emotion can not enter into decision making. Two sources of water, clean socks, long arm, side arm on the hip, at least 90 rounds. Ka-Bar or tomahawk on the other hip, boot knife, survival knife upside down on the chest, two throwing knives attached to the back of your harness near the nape of your neck. Now, we're ready. Get to work. We'll live off the land if we must. For we may win, and we may lose, but honor is forever. Our field awaits.
At the time of publication Guilfoyle was long NVDA, MSFT, AMZN, and AMD.
