NVIDIA regains its status as world’s most valuable company and races to 148

NVIDIA stock continued to move within a medium-term uptrend, as it was forecast earlier. The price returned to February’s highs and is poised to test all-time maximums hit in January. The nearest target for buyers could be the level of 148 and then the 152 mark. Yesterday, NVIDIA regained its status as the world's most valuable public company, overtaking Microsoft. This increases the chances of drawing more investor attention.

Since reaching its April low, NVIDIA stock has gained 50%, adding more than $1 trillion to the company's market capitalization. Buying the drawdown back was justified by the quarterly report last week. Bloomberg notes that NVIDIA has not suffered significant damage from the restrictions on chip exports to China, which accounts for 13% of the company's revenue. Possible losses in this market may be offset by expanding cooperation with countries in the Middle East.

According to Bloomberg, Wall Street’s consensus forecast for NVIDIA stock stands at $170, implying an upside potential of more than 20%. NVIDIA shares, while popular with retail traders, are still not in the portfolios of many investment funds. Bank of America estimates that over 90% of Amazon’s, Apple’s, and Microsoft’s shares are owned by institutional investors. NVIDIA’s figure stands at only 74%, indicating that there is significant opportunity to build up long positions.

Jefferies sees NVIDIA's main advantage in the high-margin business. At the moment, it is about 50%, and in the next few years it may reach 60–80%. These figures are outstanding for software developers alone, and even more so for hardware manufacturers. The company's new business model makes it extremely difficult and costly for its customers to leave for competitors, and NVIDIA has effectively become an unrivaled chip supplier for the artificial intelligence industry. 

Thanks to a slight correction in late May, the RSI has moved out of the overbought zone and now does not prevent NVIDIA from moving towards 148.

Consider the following trading strategy:

Buy NVIDIA at the current price. Take profit – 148. Stop loss – 132.