Tech Titans: NVIDA, AMD, Tesla, Apple SPX Update Analysis 07/22/2024
Weekly Stock Update Analysis
Hey there, savvy investors! We’re back with another deep dive into the tech titans that are shaking up the markets.
If you’ve missed this portfolio back test. Check it out below.
A Deep Dive into NVIDIA, AMD, Tesla, and Apple
For context check the previous analysis when I called the local tops!
We’ve just entered the second half of 2024, four heavyweights are still hogging the spotlight: NVIDIA, AMD, Tesla, and Apple. Let’s look into fundamental firepower, and technical tea leaves to uncover the golden nuggets and potential pitfalls that could make or break your portfolio.
I've never seen a tech landscape quite like this one. These four horsemen are rewriting the rules of the game. So let’s separate the signal from the noise.
NVIDIA: The AI Powerhouse
Fundamental Analysis
NVIDIA's dominance in the AI chip market continues to drive its stellar performance. Key metrics include:
Revenue Growth: YoY increase of 42% to $38.7 billion (based on last reported quarterly earnings)
Gross Margin: Expanded to 73.2%, up from 67.1% year-over-year
AI and Data Center Revenue: Now accounts for 60% of total revenue, up from 45% last year
The company's strategic focus on AI has paid off handsomely. With the global AI chip market projected to reach $304.7 billion by 2030 (Grand View Research), NVIDIA is well-positioned to capitalize on this growth.
Technical Analysis
As of July 22, 2024, NVIDIA (NVDA) is trading at $120.35, down 2.61% in the current session. Key technical indicators include:
50-day Moving Average: $115.23
200-day Moving Average: $102.78
RSI (14-day): 62.14, indicating slightly overbought conditions
The stock is trading in a parallel channel formation, with a potential target of $141.00. The lower boundary of the channel at $110 serves as a strong support level.
Risks and Opportunities
While NVIDIA's growth story remains compelling, investors should be aware of:
Valuation concerns: P/E ratio of 65.3 vs. industry average of 22.4
Increasing competition from AMD and Intel in the AI chip space
Potential for market saturation in the gaming GPU segment
However, NVIDIA's continued innovation in AI and data center technologies presents significant upside potential.
Check our 12 hot pick if you haven’t yet!
12 hot stocks, Portfolios update. Weekly Stock Pick.
AMD: The Underdog Rising
Fundamental Analysis
AMD has been steadily gaining market share in both CPU and GPU markets. Key metrics include:
Revenue Growth: YoY increase of 23% to $24.1 billion (based on last reported quarterly earnings)
Gross Margin: Improved to 52%, up from 48% year-over-year
Data Center Revenue: Now represents 30% of total revenue, up from 20% last year
AMD's success in the data center market, particularly with its EPYC processors, has been a key driver of growth.
Technical Analysis
As of July 22, 2024, AMD is trading at $151.58, down 2.69% in the current session. Key technical indicators include:
50-day Moving Average: $145.32
200-day Moving Average: $132.67
RSI (14-day): 58.23, indicating neutral conditions
AMD shows a forecasted trading range between $147 and $181, with an "Ultimate Target" around $200.
Risks and Opportunities
AMD faces several challenges:
Intense competition from Intel in the CPU market
Potential cyclical downturn in the semiconductor industry
Supply chain disruptions affecting production capabilities
However, AMD's continued market share gains and technological advancements in both CPU and GPU markets present significant growth opportunities.
Tesla: Navigating the Electric Future
Fundamental Analysis
Tesla continues to lead the global EV market, but faces increasing competition. Key metrics include:
Revenue Growth: YoY increase of 18% to $94.2 billion (based on last reported quarterly earnings)
Gross Margin: Declined to 19.3% from 25.1% year-over-year due to price cuts
Vehicle Deliveries: 1.8 million units in the past year, up 21% YoY
Tesla's energy business, including solar and energy storage, has shown promising growth, now accounting for 8% of total revenue.
Technical Analysis
As of July 22, 2024, Tesla (TSLA) is trading at $239.20, down 4.02% in the current session. Key technical indicators include:
50-day Moving Average: $220.45
200-day Moving Average: $205.78
RSI (14-day): 70.12, indicating overbought conditions
The chart shows that Tesla has recently reached a potential target of $247.43, which could explain the current pullback. A support zone is visible around the $220 area.
Risks and Opportunities
Tesla faces several challenges:
Increasing competition in the EV market from traditional automakers and new startups
Margin pressure due to price cuts and rising input costs
Regulatory risks, particularly related to autonomous driving technology
However, Tesla's brand strength, technological leadership in EVs, and potential in energy storage present significant growth opportunities.
Apple: The Steady Giant
Fundamental Analysis
Apple's ecosystem strength continues to drive its performance. Key metrics include:
Revenue Growth: YoY increase of 6% to $397.3 billion (based on last reported quarterly earnings)
Gross Margin: Improved to 44.3% from 43.1% year-over-year
Services Revenue: Now accounts for 22% of total revenue, up from 19% last year
Apple's services segment, including Apple Music, Apple TV+, and the App Store, has been a major growth driver.
Technical Analysis
As of July 22, 2024, Apple (AAPL) is trading at $224.31, down 0.06% in the current session. Key technical indicators include:
50-day Moving Average: $218.67
200-day Moving Average: $202.45
RSI (14-day): 65.32, indicating slightly overbought conditions
The chart shows multiple Fibonacci retracement levels, with a potential target retracement to around $198.02.
Risks and Opportunities
Apple faces several challenges:
Saturation in the smartphone market
Increasing regulatory scrutiny, particularly regarding App Store practices
Potential supply chain disruptions due to geopolitical tensions
However, Apple's strong brand, growing services segment, and potential new product categories (like AR devices) present significant growth opportunities.
What’s next: SPX at Crossroad?
The S&P 500 robust uptrend since the pandemic-induced lows of 2020. Let's break down the key technical aspects:
Trend Strength: The index has consistently formed higher highs and higher lows, a classic hallmark of a strong bull market.
Support Structure: A critical ascending trendline, visible on TradingView charts since 2020, has acted as a reliable support, underpinning the uptrend.
Current Valuation: As of July 2024, the S&P 500 is hovering around 5,500, pushing into new all-time high territory.
Buffett Indicator: A Contrarian Signal
A measure of total market cap to GDP, is flashing warning signs:
Bearish Divergence: While the S&P 500 continues its ascent, the Buffett Indicator has been on a downward trajectory since late 2021.
Historical Context: Current levels of the indicator mirror those observed prior to previous significant market corrections.
Overvaluation Concerns: The declining indicator suggests that equity valuations may be stretched relative to economic fundamentals.
Projections for the Coming Half-Year
Given the conflicting signals from price action and valuation metrics, we can anticipate:
Correction Potential: The bearish divergence elevates the risk of a market pullback. Historically, such divergences have often preceded significant retracements.
Sector Dynamics: Expect potential rotation from high-beta tech stocks into more defensive sectors as risk mitigation strategies come into play.
Volatility Surge: The discord between price trends and valuation metrics is likely to amplify market volatility.
Key Support Levels: Monitor the long-term trendline, currently intersecting around 5,000 on the S&P 500. A breach below could signal a more profound downturn.
Economic Indicators: Pay close attention to inflation data, employment figures, and GDP growth rates. Robust economic fundamentals could sustain bullish momentum despite elevated valuations.
Monetary Policy Impact: Any shifts in Federal Reserve stance, particularly regarding interest rates, could significantly influence market direction.
Earnings Focus: In an environment of potential overvaluation, companies must deliver strong earnings to justify current multiples. Earnings misses could trigger sharp selloffs.
Balancing Optimism with Caution
Despite conflicting market signals, the S&P 500's uptrend suggests bullish momentum, but the Buffett Indicator's bearish divergence warns of potential volatility.
High-growth tech stocks like NVIDIA, AMD, Tesla, and Apple offer exciting opportunities but come with increased risk due to their premium valuations. Balancing these stocks with more stable investments can help mitigate potential market corrections.
Stay informed about economic developments, adapting to changing market conditions, and considering both fundamental strengths and risks of individual companies are crucial strategies.
Remember what goes up must come down (eventually)
Stay safe and invest wisely and this is in no mean financial advice.Harry