- NVIDIA stock price is hovering near its all-time high.
- The top technology companies in the US will spend $725 billion in Capex this year.
- The stock has formed a bullish flag pattern, pointing to more gains.
NVIDIA stock price has done well this year and is hovering near its all-time high as numerous catalysts emerge. NVDA was trading at $209 on Thursday, a few points below the all-time high of $216. It has formed a mega bullish chart pattern, pointing to more gains in the near term.
NVIDIA Stock May Surge as AI Spending Surges
NVDA stock price will likely benefit from the ongoing artificial intelligence spending boom, which is set to accelerate.
The four biggest American companies pledged that they will spend over $725 billion in capital expenditure this year. This is a big increase from the $650 billion they pledged to spend in the previous quarter.
Microsoft, which is NVIDIA’s biggest client, plans to spend $190 billion this year, with $25 billion of this being because of higher component prices. It spent $150 billion a year ago.
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Alphabet, the parent company of Google, plans to spend between $180 billion and $190 billion this year, while Meta Platforms boosted the spending package from $125 billion to $145 billion. Amazon plans to spend $200 billion in capital expenditure this year.
NVIDIA stands to benefit from this spending as it is the biggest supplier of AI chips to these companies. This means that the company will likely report stronger-than-expected financial results in May.
Analysts expect the upcoming report to show that its revenue jumped by 78% in the first quarter to $79 billion. Chances are that its real revenue figure will be over $83 billion. The annual revenue will likely cross the $400 billion level this year.
NVIDIA’s key benefit is that it has some of the best margins in the industry, with a net profit margin of 54%. If this growth continues, the company will likely hit the $1 trillion revenue mark in the next few years.
Most importantly, the company is one of the most undervalued companies in big tech, with the forward price-to-earnings ratio being 25. This multiple is slightly above the S&P 500 Index average of 23..
NVIDIA Stock Price Technical Analysis
The three-day chart shows that the NVDA stock price has soared in the past few weeks and is now hovering near its all-time high.
This rally may continue soon as the stock has formed a bullish flag pattern, which is made up of a vertical line and a descending channel. It has already moved above the upper side, confirming a bullish breakout.
The stock has remained above the 50-day and 100-day Exponential Moving Averages (EMA), while the Relative Strength Index (RSI) has jumped above the middle line.
Therefore, the stock will likely continue rising, with the next key target being the psychological level of $250.
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