Trading NVIDIA Stock After Q3 Earnings
Nvidia reported third-quarter earnings for the period ending October which showed better-than-expected sales but lower-than-expected earnings per share.
Since reaching a record high of $346.47 in November 2021, the share price crumbled around 68% lower by October 2022. At the time of writing, Nvidia shares are up 45% from the lows of October.
Learn more about Nvidia’s latest earnings report, what the analysts are forecasting and what the latest hedge fund activity on the stock has been.
|Symbol for Invest.MT5 Account:||NVD|
|Date of Idea:||29 Nov 2022|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Trading Nvidia Stock Pros and Cons
Nvidia’s latest third-quarter earnings report showed:
- Revenue: $5.93 billion vs an expected $5.77 billion
- Earnings per share: $0.58 vs an expected $0.69 per share
- Gross margin down 53.6% due to an inventory charge related to lower demand for data centre chips in China
- Gaming division sales of $1.57 billion which is down 51% year on year
- Data centre sales of $3.83 billion which is up 31% year on year
Nvidia is considered to be an important indicator of the overall health of the tech industry as it provides chips to cloud providers and computer makers. Due to lower overall demand from consumers, chip companies have slashed their order forecasts and have warned investors that customers are overstocked with chips.
As such, Nvidia has slowed its pace of hiring to adapt to the changing climate. While Nvidia is known for its super-fast graphic processing units used in gaming, lower demand from China’s zero-Covid policy has seen them sell less to retailers due to them having more inventory than demand. Sales were down 51% year on year.
While there were some positives in the earnings report from higher sales of its data centre chips to US cloud-based and internet companies, Nvidia warned it would also be hit by the US ban on artificial intelligence chips being sold to Chinese companies.
Nvidia Hedge Fund Holdings
The latest 13F filing report submitted to the Securities and Exchange Commission of 462 hedge funds, shows that hedge funds increased their holdings in Nvidia shares by 9.5 million shares in the last full quarter.
The overall trend quarter-by-quarter has been mixed this year. The March filing showed hedge funds increased their positions in the stock before the June filing showed they decreased their position in the stock.
More notably, the September filing shows the biggest increase in hedge fund holdings for at least the past 8 quarters – likely due to the significant crash in its stock price.
Nvidia Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for an Nvidia stock forecast in the past 3 months, there are currently 21 buy, 7 hold and 0 sell ratings on the stock. The highest price level for an Nvidia stock forecast is $320.00 with the lowest price target at $133.00.
The average price target for an Nvidia stock forecast is $196.15.
An Example Trading Idea for the Nvidia Stock Price
An example trading idea for the Nvidia share price could be as follows:
- Buy the stock on a break above $166.00 to allow for current market volatility.
- Target just below the average analyst price target at $196.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Nvidia shares:
- If target is reached = $300.00 potential profit ($196.00 - $166.00 *10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering that Nvidia was down 68% on the year in October.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Nvidia stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Nvidia Stock in 4 Steps
With Admirals, you can buy shares in companies like Nvidia with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Click on the banner below to trade Nvidia stock today! ▼▼▼
Do You See the Nvidia Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Nvidia's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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