Nvidia, IBD Stock Of The Day, Impresses With Accelerating Data Center Sales
  
PATRICK SEITZ 04:46 PM ET 08/19/2021
IBD Stock Analysis
Stock has formed a cup-with-handle base with buy point of 207.32Early entry was available at 197.70 after shares cleared downtrendThursday's low of 187.62 makes for a good stop-loss sell point
Composite Rating - 96/99
Industry Group Ranking - 72/197
Emerging Pattern - Cup with Handle
Nvidia ( NVDA) is the IBD Stock Of The Day after the graphics-chip maker delivered a beat-and-raise report for its fiscal second quarter, thanks to strong data center sales. Nvidia stock is approaching a formal buy point on the news.
Late Wednesday, the Santa Clara, Calif.-based company said it earned an adjusted $1.04 a share on sales of $6.51 billion in the quarter ended Aug. 1. Analysts expected Nvidia earnings of $1.02 a share on sales of $6.33 billion, according to FactSet. On a year-over-year basis, Nvidia earnings jumped 89% while sales surged 68%.
For the current quarter, Nvidia expects to generate sales of about $6.8 billion, up 44% year over year. Wall Street had been modeling sales of $6.57 billion in the fiscal third quarter.
Nvidia makes graphics processors for personal computers, video game consoles and data centers. It has been called the " undisputed leader" in chips for artificial intelligence.
Nvidia Stock Nears Buy Point
In afternoon trading on the stock market today, Nvidia stock rose 4% to 197.98.
Nvidia stock is forming a cup-with-handle base with a buy point of 207.43, according to IBD MarketSmith charts.
However, aggressive investors could have used Nvidia's move above its Tuesday high of 197.70 as an early entry because it cleared a short downtrend.
Thursday's low of 187.62 is a good stop-loss sell point as that would be a decisive fall below it 10-week moving average line.
In a positive sign, Nvidia stock has surged above its 50-day moving average line.
Multiple Price-Target HikesAt least 14 Wall Street analysts raised their price targets on Nvidia stock after the company's second-quarter report. Of those, 13 have buy ratings on the stock and one is neutral.
Evercore ISI analyst C.J. Muse maintained his outperform rating in Nvidia stock with a price target of 250.
In a note to clients, Muse said he was impressed by the company's accelerating data center sales.
"We continue to view Nvidia as one of the best secular growth stories as the company continues to position itself as the AI Compute Platform Company," Muse said.
Nvidia Stock On Several WatchlistsNvidia's data center chip sales rose 35% year over year to $2.37 billion in the second quarter. The segment made up 36% of Nvidia's total sales last quarter.
Meanwhile, the company's gaming chip sales soared 85% to $3.06 billion in the second quarter, despite being supply-constrained. Gaming chips accounted for 47% of Nvidia's revenue in the period.
Nvidia stock is on IBD's SwingTrader and Leaderboard stock lists. It also is on the IBD 50 list of top-performing growth stocks.
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