Thursday's Market Minute: Nvidia Soars After Earnings, Fueled By Surging AI Demand

Nvidia NVDA shares were up more than 30% in premarket trading, rocketing into all-time intraday highs after reporting quarterly results that beat on both earnings and revenue. The chipmaker notched adjusted EPS of $1.09, beating estimates by $0.17, and also posted revenue of about $7.19 billion. But guidance may have been the true star of the show for the semiconductor company, as it gave blowout expectations for second-quarter revenue at about $11 billion versus the Street’s expectations of $7.2 billion. CEO Jensen Huang also noted high demand for Nvidia’s chips that power generative AI. 

When a stock is making all-time highs, it can be difficult to project where one might expect to see some form of resistance as there is no previous price history to work with. Additionally, other indicators such as moving averages provide little help for assessing support, as they tend to lag price and can be left behind in the dust during fast, sharp price moves. One of the ways to help assess where to find a potential stopping point for price is using Standard Deviation Channels.

This study creates a Linear Regression Line (a line of “best fit” based on closing prices during the given time period), then extrapolates channels to the upside and the downside based on standard deviations from this line based on the variance in the closing price data. This gives traders some idea of whether the stock is closer to “fair value” (the Linear Regression Line) or to a relatively extreme price which is signified by one of the channels. 

Nvidia’s post-earnings move is significant in this regard as it is at a more extreme price point, with price action coming in between the +2 and +3 Standard Deviation Channels near 361 and 414 respectively, based on yesterday’s closing price. This study provides some potential boundaries for traders to watch as the day progresses.

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