Since the market's low in late 2018, Tech QQQ ETF has surged more than 30%, while shares of Nvidia (NASDAQ: NVDA) have increased by 50%. In the meantime, Nvidia’s 4Q gaming sales dropped 45% from a year earlier. Data-center sales were only up 12%, which is far behind 58% a quarter ago and 104% a year ago. In the near term, there has been no sign yet that China’s gaming-chip demand has strengthened or cloud-spending cut is reversed to increase data-center sales. As a result, many have credited the market rebound to the widespread expectation of a better 2H 2019. In this post, I identified several conditions that need to happen to justify a recovering 2H 2019 and a near $200 Nvidia stock price.
Technically, while there has been no good company-specific news since 4Q ER, Nvidia’s stock has climbed back above the level before CEO Jensen Huang’s unusual warning in lowering 4Q revenue guidance, citing weaker sales of its gaming and datacenter platforms, deteriorating macro conditions particularly in China, for customers delaying orders.