Nvidia Nears Record High: What TSMC’s Sales Mean for Traders
Overview: Nvidia’s Market Position
Nvidia is just a whisker away from hitting its record high closing price of around $135, achieved back in June. On Wednesday, Nvidia stock wrapped up the trading day at $132.65, a slight dip of 0.2% after an impressive 4.1% rally just a day prior. What’s pushing Nvidia? A significant boost from its key supplier, Taiwan Semiconductor Manufacturing Company (TSMC), and ongoing excitement surrounding AI technology, particularly concerning Nvidia’s cutting-edge chips.
TSMC’s Impact on Nvidia
On Wednesday, TSMC reported a remarkable **40% increase** in its September sales year-over-year, totaling 759.69 billion New Taiwan dollars (approximately $23.58 billion). While TSMC’s commentary was sparse, the potential implications for Nvidia are massive. With expectations of third-quarter revenues hovering between $22.4 billion and $23.2 billion, the ripple effect is clear: TSMC’s strong performance could lay the groundwork for Nvidia’s continued ascent in the chip market.
Investors are optimistic, especially since TSMC has confirmed plans to double its **CoWoS** (Chip-on-Wafer-on-Substrate) advanced packaging capacity by the end of 2024. CoWoS is crucial for manufacturing Nvidia’s highest-performing AI chips. As both companies grapple with soaring demands for AI hardware, the outlook for Nvidia appears brighter than ever.
Focus on AI Investment
Forget the earlier concerns surrounding potential delays in shipments of Nvidia’s upcoming Blackwell AI chips. The market buzz has shifted to how robustly both companies can invest in AI technologies moving forward. Based on consensus estimates, Nvidia alone is forecasted to generate **$175 billion** in revenue next year, with projections reaching as high as **$225 billion by 2027**. This casts a shadow on competitors and positions Nvidia as a dominant player.
According to analysts at JP Morgan, the full-scale AI spending could balloon to an astonishing **$1 trillion** when factoring in the entirety of the tech hardware supply chain, research and development (R&D), and operational expenses. That’s an overwhelmingly bullish narrative for traders looking to get in on Nvidia’s action.
Technical Analysis: What the Charts Say
From a technical perspective, Nvidia is trading just beneath its record highs, creating a setup for traders to watch closely. The price action over the past few days has shown a bullish momentum, and the stock is forming an ascending triangle pattern. Resistance lies firmly at the $135 level, while support is building around the $130 mark.
Momentum indicators like the Relative Strength Index (RSI) are hovering near the upper limits of the range, signaling that traders should be mindful of potential pullbacks. A breakout above the $135 level could unleash a fresh wave of buying pressure, making this a key price point to keep on your radar.
Conversely, should Nvidia fall below $130, it might trigger stop-loss orders and inject a wave of selling, which could lead to a deeper pullback. As always, staying agile and ready to adjust positions based on incoming news and price action is crucial.
Conclusion: The Path Ahead for Nvidia Traders
All signs point to Nvidia being on the cusp of a significant breakout. With TSMC’s robust sales figures supporting its supply chain and the overwhelming bullish sentiments surrounding AI technologies, traders should prepare for what could be a transformative phase for Nvidia. Keep your eyes peeled for company updates and market news that may impact trading strategies.
In summary, if you’re looking to capitalize on the momentum, the $135 resistance is a key level to watch. Should Nvidia break through, it may just be the springboard for further gains. On the flip side, be ready to react if momentum falters, and always consider the broader market conditions impacting tech stocks. Stay sharp and trade smart, savvy traders!