Technical & fundamental analysis to determine buy area:Nvidia

Hello,

NVIDIA Corp 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), Tegra Processor, and All Other.

The company is setting up for buy positions on the 6hour & bigger timeframes. I will be looking to buy the stock from around USD 772 areas. The pattern forming is a corrective wave. The pattern that has worked very often in markets, its very key in seeing entries as well as target areas. An example can be seen here

Another corrective wave can be seen here


After understanding the patterns being formed and the price action being printed on the charts, very key is also to understand the fundamentals affecting the company. A simple way of looking at this is by looking at the SWOT analysis. A SWOT analysis evaluates a company's strengths, weaknesses, opportunities, and threats. Here's a detailed SWOT analysis for NVIDIA.

Strengths

• Market Leadership in GPUs:
  

NVIDIA is the dominant player in the GPU market, known for its high-performance graphics cards used in gaming, professional visualization, data centers, and AI applications.
Innovative Technology: NVIDIA continuously pushes technological boundaries with advancements in AI, deep learning, and real-time ray tracing, maintaining a competitive edge.

• Strong Brand Reputation:
  

The company enjoys a strong brand reputation among gamers, professionals, and developers, fostering a loyal customer base.

• Diverse Applications
  

: NVIDIA's technology is used across various industries including gaming, automotive, healthcare, and data centers, providing multiple revenue streams.
Strategic Partnerships and Acquisitions: The company has formed strategic alliances and acquired companies like Mellanox and ARM (pending regulatory approval), enhancing its technological capabilities and market reach.

• Robust Financial Performance
  

: NVIDIA has shown consistent revenue growth and profitability, backed by strong demand for its products.
Weaknesses

• High Dependency on Gaming Market:
  

A significant portion of NVIDIA’s revenue comes from the gaming industry, making it vulnerable to market fluctuations.

• Supply Chain Constraints:
  

Like many tech companies, NVIDIA faces supply chain challenges, which can impact product availability and sales.
High R&D Costs: The company invests heavily in research and development to stay ahead of competitors, which can strain financial resources.

• Regulatory Risks:
  

The pending acquisition of ARM is under intense regulatory scrutiny, and failure to secure approval could impact strategic plans.

Opportunities

• Growth in AI and Machine Learning:
  

Increasing adoption of AI and machine learning across industries presents significant growth opportunities for NVIDIA’s GPUs and AI platforms.

• Expansion in Data Centers:
  

The rising demand for data processing and storage solutions offers expansion opportunities in the data center market.
Automotive Industry: NVIDIA's advancements in autonomous driving technology can capitalize on the growing trend towards self-driving cars.
5G Technology: The rollout of 5G technology could drive demand for NVIDIA’s products, particularly in mobile edge computing and other applications.
Metaverse Development: NVIDIA's technologies are well-positioned to support the development of the metaverse, a rapidly growing virtual world market.

Threats

• Intense Competition
  

: NVIDIA faces stiff competition from companies like AMD, Intel, and emerging players in the AI and GPU markets.
Geopolitical Tensions: Trade tensions, particularly between the US and China, could affect NVIDIA’s global operations and supply chains.

• Intellectual Property Challenges
  

: Protecting intellectual property in a highly competitive and rapidly evolving tech landscape is a constant challenge.

• Economic Downturns:
  

Economic slowdowns can reduce consumer and enterprise spending on technology, impacting NVIDIA’s sales.
Technological Obsolescence: Rapid technological changes mean that NVIDIA must continually innovate to avoid obsolescence.

NVIDIA's strong market position and innovative capabilities provide a solid foundation for future growth. However, the company must navigate competitive pressures, regulatory challenges, and economic uncertainties to sustain its leadership in the tech industry.

With this in mind and the technical analysis showing a corrective Flag pattern forming, it is wise to wait and buy the stock from the bottom. Adding in the use of indicators can also build your investment thesis and make your trades more confident. In our case, I shall be incorporating the MACD to look & confirm my buy. For me the zero crossover will confirm my buy thesis for me to trigger my positions.

I will be buying from the bottom. This is because I do not short quality companies & buying from the dip greatly reduces the risk.

GOOD luck in your trading journey!