The future is always uncertain. If you want to stay away from the sunny side, I can give you at least seven reasons to be pessimistic and probably more. But does it matter? Your views count for nothing in financial markets if they are not in sync with the market. Let us look at how the leading large caps are shaping the market right now.
Has NVidia peaked?
No stock can run forever. NVidia stock seems to have hit the PAUSE button and trading sideways between 130-150.
NVidia’s business continues to be unstoppable. Its product is super popular and powering the AI infrastructure. The company reached record revenue of $35.1 billion in its last quarter, and it experienced a growth of 93% over the previous year. But there are two things to keep in mind – Can the company clock a similar growth rate forever, and how will the market respond if the company sees a deceleration in growth rate?
Is Broadcom AVGO a better alternative?
Broadcom has joined a Trillion-dollar market cap club after delivering a stunning quarter, thanks to strong sales of AI processors and networking chips. The company is entering into a strong growth phase, and institutions are rushing to buy the stock.
Broadcom formed a base at 200 dma/140 levels in September 2024, and now 3.5 months later, the stock is up 60%. However, with the Gap-up breakout, the stock still has a huge upside. One should look to add the stock near the 215-220 band for a target of $300.
I recommended MRVL along similar lines last week
AMD struggles with Peak Pessimism
Why is the market so pessimistic about AMD? There seem to be two reasons: 1. The PC market is slowing, where AMD has a huge presence, and 2. It’s unable to grab market share from NVidia in the AI chip market. Nvidia dominates the AI accelerator market with a 70-90% market share. Last week, Bank of America downgraded Advanced Micro Devices stock to Neutral from Buy with a price target of $155, down from $180.
AMD stock is now trading near lows. Now, this looks unreal, but adding stock at this price seems risky as we don’t know how long it would take for the stock to turn around. It would be better to watch for signs that might change the perception of the stock. I will hold the stock if I have it, but I would not add it at this price.
Intel – A great example of why HOPE is a bad strategy?
Lots of times, we wonder how low a stock can go without realizing even if it stops falling, there is no guarantee of upside. Intel stock is failing to turn around business-wise, so it is no wonder the stock is showing no progress. Even sacking the old CEO has not helped the stock.
Tesla – Classic Example of why traders love breakout
Tesla stock broke out on Nov 06 – a day after Trump’s victory. The stock broke out above 267 and triggered a buy signal at 280. Now, 5.5 weeks later – the stock is up 54%.
The above chart is a great example of what happens when some fundamental development powers a breakout.
Uber: When in doubt, stay out
The entire market is going up, but Uber investors are not feeling the bullish energy. The stock is down 20% over the last 1.5 months because of news that might impact Uber’s future business. Example: Google said it is bringing its Waymo self-driving taxis to Miami and partnering with Moove for fleet management. That’s bad news for Uber. Robotaxi is not a threat to Uber as it partners with robotaxi makers around the world. Example: Uber and WeRide to launch ride-hailing in Abu Dhabi.
The problem right now is a lack of clarity on how Robotaxi will shape the future of the ride-hailing industry, and traders are dumping Uber stock due to that.
Chart Source: Finviz.com
Nothing here or in the newsletters constitutes financial advice. These are just my views based on my experience.
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