Nvidia is the IBD Stock Of The Day as the graphics-chip maker continues to dominate conversations about cloud service provider investments in artificial intelligence. Also, NVDA stock cleared a short consolidation on Monday.
In morning trades on the stock market today, NVDA stock popped out of a three-weeks-tight pattern at a buy point of 281.20, according to IBD MarketSmith charts. Nvidia jumped 4.2% to close at 289.10.
With Nvidia's positive move Monday, investors could start a small position or add to an existing position in NVDA stock.
However, if the breakout fails, investors should use the stock's April 25 low of 262.25 as an exit point. That exit also would be below the stock's 10-week moving average line, a key support level.
NVDA stock has been surging this year as investors take note of the company's key position in providing technology for artificial intelligence. Year to date, Nvidia shares are up 97.8%.
NVDA Stock Called 'Top Pick'
Earlier Monday, Rosenblatt Securities analyst Hans Mosesmann named Nvidia as one of seven semiconductor stocks likely to benefit from the surge in spending by tech companies around artificial intelligence. Nvidia sells graphics processing units, accelerators, software tools and other offerings for AI projects.
"The compute requirements for the next phase in AI is massive and with no end in sight," Mosesmann said in a note to clients. "Today's training of large AI models is easily a $100 million-plus proposition."
Mosesmann rates NVDA stock as buy with a price target of 320.
Also on Monday, Evercore ISI analyst C.J. Muse called Nvidia a "top pick" in a note to clients.
Catalysts Ahead For Shares
Potential catalysts for Nvidia stock include the company's next earnings report, due May 24. Also, Nvidia Chief Executive Jensen Huang is giving a keynote speech at the Computex trade show in Taiwan on May 29.
NVDA stock is on IBD's Leaderboard and Tech Leaders stock lists. Further, it has an IBD Composite Rating of 98 out of 99, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, IBD has identified a bull call spread for Nvidia stock.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
