This stalled tech juggernaut is starting to break out again, according to the charts

Published Tue, Jan 9 202412:30 PM EST

Nvidia (NVDA) was surprisingly quiet in the back half of 2023 despite some amazing earnings beat-and-raise quarters. NVDA was especially quiet during the amazing rally led by technology in the fourth quarter. Only just on Monday did NVDA finally break free from the technical range that held the stock captive below the undoubtedly psychologically important $500 resistance level. Has the stock come too far too fast? Is there more room to go? I think the answer is yes, there's more room for the stock to run. I hold the stock personally, in my wealth management, and hold options in the stock. Yeah, I'm pretty long. Many say we're moving into the 'exponential age', which is characterized by increased computing power, efficiencies, and automation that spans sectors well beyond just technology. If we're truly headed in this direction, the increased computing power will change the way we interact socially, professionally, and provide a real boost to our economy. This will increase corporate productivity and profit margins for companies, while acting as a deflationary force on our economy. That comes at a pretty opportune time as we're combatting a four-decade spike in inflation following the pandemic and unwind of QE. Goldman's Peter Oppenheimer believes we are moving into a new super cycle driven by artificial intelligence and decarbonization, drawing comparisons to the 1980's. Just think of the bull market that began in 1982 with the likes of IBM and a few stocks that came to market in the 1980s like Apple and Microsoft. Finally breaking $500 Back to Nvidia, the clear winner of the massive rotation into semiconductors as we charge towards the exponential age. However, lately the stock's been quiet. Take a look at this relative rotation graph of NVDA benchmarked to the S & P 500 index. From August until about two weeks ago, NVDA has been losing relative strength to the benchmark S & P 500, but do you see how it just turned higher? That coincides with the stock finally breaking through the overhead ceiling of supply at $500 on news that NVDA will begin production of its high-powered H20 chip that complies with U.S. export-rules to China. This also comes ahead of the Consumer Electronics Show in Vegas this week where Nvidia is usually the headliner and they plan to unveil their new line of RTX chips that will help the company reassert its leading position in the space. Fundamentally, is the bullish call justified? The company will make about $3.34 in earnings per share for 2023 with analysts looking for an astounding $12.25 per share in 2024. At the current price of $529 that puts a forward multiple of 43 times, which may seem expensive, but with top line growth and margins increasing, I think there is more upside room for the stock. We are looking for the stock to target $650 in the first half of '24 and ultimately $775 in all of 2024. DISCLOSURES: (Gordon owns NVDA in personal (stock and options) and stock in wealth management business.) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.