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- Three Stocks Thought to Climb in April 2022: Nvidia
Three Stocks Thought to Climb in April 2022: Nvidia
Shares of this giant computer systems design company, which is also a world leader in graphic processor supplies, are trading with a 20% discount compared to their record peaks of $346.47 in November 2021. Market actions were clearly running ahead of the unfolding of the story at some point amid a global shortage of chips, which created a panic demand. During this time its shares fell below $210 for a few months, providing a good opportunity for a mid-term rally.
The tailwind blowing with the continuing deficit of chips and rampant inflation worldwide pushed Nvidia shares by 40% above $280. Yet, the price still looks rather attractive. Acceleration of the uptrend was supported by the news that Nvidia and its Intel rival announced their common production plans. Jensen Huang, the chief executive of Nvidia, made a statement that his company is going to use Intel's industrial facilities to source more of Nvidia's designed chips. Intel CEO Pat Gelsinger commented soon after that his company is "thrilled for their interest in using our foundry capabilities", while adding that he had "no particular timeline" but Intel had "ongoing discussions" with Nvidia. The point is that Intel did not manage to distribute more Intel chips over the last two or three years and after this time it then decided to diversify its business by launching the so-called "foundry" projects. Nvidia does not want to miss this opportunity for its global expansion.
"They're interested in us using their foundries. We're very interested in exploring it," Jensen Huang responded later. He even removed some scepticism about his company's willingness to make Nvidia technology explicit to competitors by saying that "Intel has known our secrets for years" because Nvidia has already been partnering with many companies including Intel, and so "trusting and working with industry partners is key" for Nvidia management. Some organisational aspects and technical details, including mutual coordination of supplies, may still take quite a long time, but that could benefit shares of both companies. The announcement of the co-operation with Intel pushed Nvidia stocks up by almost 10% the next day. However, in April these shares have a good potential to become as hot as they were in March.
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