MSFT Vs NVDA: Which Stock Will AI Fuel First?

It seems like crypto is no longer the king of buzzwords, not for now, anyway. We have a new boss on the scene - Artificial Intelligence (AI). 

The world has gone absolutely berzerk for OpenAI’s ChatGPT. And rightly so. Elon Musk was one of the founders back in 2015 but stepped down in 2018 so as not to have any conflict with Tesla. However, he remains a donor. 

Having spent some time with it, ChatGPT is definitely a nifty bit of kit. It’s not flawless by any means, but it will only improve, and it certainly will impact the world as we know it. 

And, of course, all the big dogs want to get involved as they smell the money. 

On a quick side note, never underestimate the power of the human brain when it comes to investing. AI does not have the discretionary power to pick the best stocks. You do though if you train your brain correctly. 

Back to the topic…

Microsoft has recently committed further billions to the future of ChatGPT following the initial billion dollars in 2019. Simultaneously, they have sacked 5% of their workforce. 

NVDA is ultimately the backbone of the AI infrastructure through its revolutionary chips. It recently released a beta version of Nvidia Eye Contact, where your eyes will always maintain direct eye contact through the screen no matter where you look. Creepy!

 

The question for stock investors is how will this translate to profit?

Let’s start with Microsoft Corp MSFT

I have the weekly timeframe below.

The price dropped by 38% through 2022. Since October, it has found support at the weekly 200 simple moving average (w200sma). There has been little movement in the stock price since the announcement of further investment in ChatGPT. However, there was also little decline when the job cuts were announced. 

It seems that MSFT is holding well at the w200sma support level (black line) and is currently trading inside a consolidation (orange shade). We now need to see a decisive move to the upside. 

Let’s look at NVIDIA Corporation NVDA

Below I have the weekly timeframe. 

NVDA took a much bigger hit in 2022, dropping by 68%. It also found support around the w200sma (black line) in September, but unlike MSFT, NVDA is showing a much stronger sign of recovery (green shade). The stock price has bounced 88% at the time of writing. 

Could it be that people like creepy AI software? Shock horror!

As investments, they both have their pros and cons. 

MSFT has a much smoother performance history but is yet to show its cards in terms of where the job cuts sit. It will likely have little impact. We must apply patience and wait for the stock price to dictate a move. 

NVDA also has a decent performance history, but it is prone to much deeper declines when going through corrections. 

My personal preference is MSFT, given its performance history, but both stocks need to meet my trading plan before I consider a position.

I prioritise stocks that are printing new all-time highs as they have the best-performing trends over 12 to 24 months. Arch Capital Group Ltd. ACGL, for example. 

For now, I continue to monitor MSFT and NVDA from the sidelines without creepy eyes (maybe).