NVIDIA CORP (NASDAQ:NVDA) Combines Strong Growth Momentum with Bullish Technical Setup for Potential Breakout

The strategy of combining strong growth momentum with solid technical setups aims to find stocks showing both fast earnings growth and positive chart patterns. This method focuses on companies with quick revenue and earnings increases, backed by improving analyst estimates and growing profit margins, key factors in growth investing approaches like CANSLIM. At the same time, technical analysis confirms the stock is in a steady uptrend with a pattern that provides a clear entry point for risk management. NVIDIA CORP (NASDAQ:NVDA) stands out as a candidate fitting these two criteria, combining strong fundamental growth with a technically stable base.

Fundamental Growth Momentum

NVIDIA’s High Growth Momentum (HGM) Rating of 6 highlights its strong performance across several growth measures:

• Earnings & Revenue Growth:
  • Year-over-year EPS growth of 85.6% (TTM) and revenue growth of 86.2% (TTM) show rising demand, especially in AI and data center markets.
  • Quarterly EPS growth stays strong at 56.9% (most recent quarter), with earlier quarters showing even higher growth (72.5%, 101.5%, and 151.9%).
  • Revenue growth for the last quarter hit 69.2%, staying above 50% for multiple quarters.
• Profitability Growth:
  • Profit margins have stayed above 40% in recent quarters, reaching 56.2% in Q3 2023, showing pricing strength and operational efficiency.
  • Free cash flow per share jumped 1,312% over the past year, demonstrating NVIDIA’s ability to turn growth into real cash flow.
• Analyst Confidence:
  • The company has exceeded EPS estimates in all four trailing quarters by an average of 3.7%, while revenue surprises averaged 1.9%.
  • Though next-year EPS estimates saw small downward adjustments (-2.5% over three months), revenue forecasts were raised by 0.9%, indicating continued optimism for top-line growth.

These metrics match the HGM Rating’s focus on growth speed, surprises, and margin improvement, key for finding stocks likely to perform well during earnings-driven rallies. NVIDIA’s leadership in AI hardware and software further supports its growth story.

Technical Strength & Setup Quality

NVIDIA’s technical profile, as shown in its ChartMill Technical Report, matches its fundamental growth:

• Strong Technical Rating (10/10):
  • The stock is in a steady uptrend across all timeframes, with price above rising 20-day, 50-day, and 200-day moving averages.
  • Relative strength ranks in the top 6% of the market, outperforming 94% of all stocks and 88% of semiconductor peers.
• Consolidation Setup (7/10):
  • Recent trading between $162.02 and $183.88 has formed a narrow range near 52-week highs, lowering volatility and creating a possible breakout area.
  • Support levels are clear at $178.43–$178.94 (daily moving averages and trendlines) and $167.02 (horizontal support), offering defined stop-loss points.
  • Large investors have bought shares recently, as shown by the Effective Volume indicator, signaling institutional interest.

The setup suggests an entry above $183.89 (10-day high) with a stop below $178.42, limiting risk to 2.97%. While the tight stop may work for aggressive traders, longer-term investors might adjust the stop to account for NVDA’s past volatility.

Why This Combination Matters

Stocks with strong growth momentum often see big moves when technical breakouts align with earnings growth. NVIDIA’s fundamentals confirm its leadership in AI-driven markets, while the technical setup offers a structured entry point. The HGM Rating’s focus on revisions and surprises helps avoid "growth traps," and technical filters ensure the stock isn’t overbought.

For investors looking for similar opportunities, the High Growth Momentum Breakout Setups Screen provides a selected list of stocks meeting these criteria.

---

Disclaimer: This analysis is not investment advice. Always conduct your own research and consider risk tolerance before trading. Past performance does not guarantee future results.