Will Tesla And Chinese Cloud Give This IBD 50 Stock A Lift? | Stock News & Stock Market Analysis

Artificial intelligence (AI) technology leader Nvidia (NVDA) has just partnered with Alibaba (BABA) rival Tencent (TCEHY) to enhance the Chinese internet giant’s cloud services business.

Nvidia’s deep-learning platform will be integrated into Tencent’s cloud-computing business to “help companies in China rapidly integrate AI capabilities into their products and services,” according to Sam Xie, vice president of Tencent Cloud.

While Alibaba is better known in the U.S. due to its historic IPO in 2014, the two competitors are roughly the same size, with Tencent generating just under $22 billion in 2016 compared to Alibaba’s $17.2 billion for the first three quarters of fiscal 2017, which ends on Mar. 31.

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A Tale Of Two Teslas

Nvidia invented the graphics processing unit (GPU) in 1999, and offers the Nvidia Tesla family of GPUs to solve High-Performance Computing (HPC) challenges.

The California-based company has also teamed up with Elon Musk’s Tesla (TSLA) to have all its vehicles, including the Model S, Model X and the upcoming Model 3, equipped with the Nvidia Drive PX 2 “supercomputer” to provide self-driving capability.

Nvidia also has partnerships with several other major carmakers, including Audi, BMW (BMWYY), Mercedes-Benz parent Diamler (DDAIF), Volvo and Honda Motor (HMC).

And not to be outdone, Tencent just announced it acquired a 5% stake in Tesla.

No. 1 Stock On IBD 50

Boosted by a 92% average earnings growth over the last three quarters and a three-year EPS growth rate of 37%, Nvidia holds the No. 1 rank on the IBD 50 list of top growth stocks.

Within the Electronics-Semiconductors Fabless industry group, Nvidia ranks No. 2, behind Broadcom (AVGO) and Monolithic Power Systems (MPWR).

Will Base Reset Launch New Run?

Nvidia was a Wall Street darling in 2016, rising 261% from a March breakout before showing topping action in late December.

While forming its current consolidation, the stock undercut the low in its prior pattern to reset the base count, although it wasn’t as sharp a break as might be expected after such a sharp run-up.

Time will tell if the reset is enough to launch a new move, and signs of institutional demand have been mixed.

Nvidia has a middling C- Accumulation/Distribution Rating, which indicates a roughly equal amount of buying and selling over the last three months.

On the positive side, Nvidia’s Up/Down Volume Ratio rose Monday to hit the 1.0 benchmark that indicates demand, and it has posted eight quarters of rising fund ownership.

Also, the 10-day moving average is trying to cross back over the longer term 50-day line, which would be a sign of renewed technical strength.

On Wednesday, Nvidia spent another day of quiet trading and support along its 50-day moving average.

Look for heavier volume on up days to kick in as Nvidia tries to complete the base and clear the 121.02 buy point in strong trade. Also see if the Relative Strength line can move closer to new high ground.


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