Buying NVIDIA shares with $191.5 in sight

Heading into its quarterly earnings report on November 19, the near-term outlook for NVIDIA shares remains overwhelmingly positive. The company still dominates the critical AI data center segment, though investors should be mindful of the risks linked to its high price-to-earnings (P/E) ratio, which indicates the stock is overvalued, and the competition is heating up.

Key drivers for NVIDIA shares include:

1. Unrivaled AI dominance. The corporation keeps setting the "gold standard" for data center GPUs, placing it at the forefront of the ongoing artificial intelligence boom. This is the company's primary growth engine, demonstrated by a 56% surge in data center revenue in the second quarter (Q2) of fiscal 2025 (ending June 27).

2. Strong financials. NVIDIA posted a solid hike in revenue and earnings per share (EPS) last quarter, highlighting its financial health. Management expects this momentum to extend into Q3, forecasting revenue of approximately $54 billion.

3. Sustained demand from hyperscalers. The firm benefits from a stable, high-demand profit stream driven by its largest customers, including cloud giants like Amazon Web Services, Microsoft, Alphabet, Meta Platforms, and Oracle, all of which are accelerating their investments in AI infrastructure.

4. Compelling forward valuation. For growth-oriented market players, NVIDIA's shares are a promising investment. Based on earnings projections for fiscal 2026, the stock is expected to trade at a more reasonable P/E ratio, mitigating concerns about its current premium.

5. Continuous innovation in AI. The company actively reinvests in its technology leadership, with recent advancements unveiled at its GTC conference in Washington. This ensures its products remain at the cutting edge.

6. Strong analyst confidence. The bullish outlook is widely shared on Wall Street, where a majority of analysts maintain a "Buy" rating and a consensus price target, implying further upside from current levels.

However, several factors indicate a potential correction:

1. High valuation. NVIDIA's current valuation appears stretched, making its shares vulnerable to a pullback if negative news emerges.

2. Increased competition. Growing competition from rivals like AMD and Intel, along with in-house chip developments from major clients like OpenAI, threatens NVIDIA's market dominance.

3. Tariff and regulatory burden. The company's business could face headwinds from new trade tariffs and an increasingly stringent regulatory environment for artificial intelligence.

4. Volatility. NVIDIA stock exhibits a high beta coefficient, signaling that it tends to be more volatile than the broader market.

From a technical standpoint, after a recent rally, the corporation's shares may be entering a period of consolidation before their next significant move.

In summary, the near-term outlook for NVIDIA is positive. The company continues to lead the key AI data center segment, backed by strong financials and favorable analyst sentiment.

The ultimate recommendation is to buy NVIDIA shares from support at $184. Profits are taken at $191.5. Stop loss is placed at $178.0.

Calculate your open position so that a potential loss (protected by a Stop Loss order) is limited to 1% of your deposit. If your account balance does not allow entering a position of this size, it is better to skip the trade and wait for other market signals that meet low-risk criteria.