Nvidia DOW Inclusion Post NVDA Stock Split

The Nvidia stock split will take place on Friday, with $NVDA stock trading at the adjusted post-split price starting on Monday. With the NVDA stocks split happening this week, here is my Nvidia stock price prediction for next week, as well as my Nvidia stock analysis. Nvidia’s announcement of their new Rubin AI chip at COMPUTEX on Sunday could be another catalyst that pushes NVDA higher. And the new AI chip announcement wasn’t the only Nvidia stock news investors need to know about. There are also rumors that Nvidia will be included in the Dow Jones Industrial Average. An upcoming Nvidia Dow Jones announcement could be another catalyst that could push NVDA stock higher.

Nvidia announced a ten for one stock split. That’s going to occur at the end of this week. This stock split opens the door for Nvidia to be included into the Dow Jones Industrial Average. And that is going to be another huge catalyst which could push Nvda even higher. In this video, we’ll talk about what the stock split is, how Nvidia is expected to perform around the stock split. If this is going to be a buy the hype, sell the news event, or if you should buy Nvidia now as the stock went down over the past two days, we’ll talk about how Nvidia performs around stock splits. Then we’ll talk about the Dow Jones inclusion. Then we’ll go through some fundamental analysis as well as some technical analysis on an Nvidia stock. And we’ll talk about how to play it both in the short term as well as for long term hold investors. For those of you who are new to this channel, my name is Scott Curry. I’m a former Merrill Lynch and Morgan Stanley investment banker and I have over 25 years of trading experience. Let’s start with what a stock split is and how it’s going to affect Nvidia stock in the short term. There’s been a lot of talk about Nvidia stock splitting on Thursday. In reality, the split is really going to take place on Friday. And the stock will start trading post split on Monday. So Friday will be the last day that Nvidia trades at over $1,000 a share. And then on Monday, it’ll start trading at a little over $100 a share. Nvidia stock has been on an absolute roar over the past few months, and this stock split is going to change some things for Nvidia’s stock market rally that we’ve seen. What you have to understand about a stock split is that a split does not fundamentally change anything about the company. All it does is break the shares into smaller pieces, which lowers the stock price per share for investors. It’s basically like exchanging a $10 bill for ten $1 bills. The total value is the same, but the per share price goes down. So why would Nvidia do a stock split if the value of the company is still going to be the same post split? The reason is because spending upwards of $1,000 for one share can be a barrier for small investors. High stock prices can be a turnoff, particularly to the retail crowd that lately has become a major trading block. Lowering the price per share through a stock split can entice new retail investors to buy. The theory is that a lot of small retail investors might not be able to afford a $1,000 stock, but they can afford a $100 stock. Unfortunately, stock splits have fallen out of style over the past few years, with fewer and fewer companies doing them The reason is because of the rise in fractional shares. Fractional shares are a way to buy a small portion of a stock instead of an entire share at one time. This feature, which major brokerages started offering in 2019 and was implemented by pretty much all brokers by 2022, means investors can spend less than the full stock price in order to own a piece of the company. Prior to fractional shares being available, stock splits were very beneficial to the stock price of a company. The reason is because small retail investors may not have been able to afford a $1,000 stock, but they could afford $100 stock. And so what a stock split would do is it would open the buying up to more retail investors, which in turn, as more and more buyers came in, would cost the stock price to go higher. So in the past, stock splits have been a big boom for stocks And a lot of retail investors remember how stocks would rally going into a stock split, and then they’d fall for about 1 to 2 weeks post stock split. And then they would go on to new all time highs. And the reason for this is because prior to fractional share trading becoming mainstream, this is how stocks performed. Investors that could afford the stock would buy it. It would cause the price to go up. And it was kind of a buy the hype, sell the news event where once the stock split took place, the stock price would come down. And then over the next week or two, retail investors would start buying new, lower prices. And this would cause the stock price to go up. Eventually reaching a new all time high. But when fractional share trading became popular, especially by the end of 2022, stocks that did splits no longer performed. This way. We no longer saw a major rally in stocks going into a split. We no longer saw the post split sell off stocks tended to just kind of ignore stock splits. And in a lot of ways, we’ve kind of seen the same thing with Nvidia lately. While we did see an initial rise in Nvidia post earnings, the rally has kind of faded. And over the last two days, Nvidia stock has actually come back down. So the stock split is once again not having this massive rally effect like we saw prior to 2019 or prior to 2021. Instead, what we’re seeing is investors pretty much ignoring the stock split. And the stock just For a lot of stocks we’ve seen have traded kind of flat or a little bit down going into the split and then post split. Sometimes they go up, sometimes they go down. We just don’t really know. So unfortunately, the stock split by itself isn’t actually having a major impact on Nvidia stock up for a great but post split, it would be the best candidate to give the Dow more AI representation, as the Dow looks to keep up with the S&P 500. Amazon was included after it split its stock, and since Nvidia is one of the largest companies in the world by market capitalization, the same thing could happen following the upcoming Nvidia stock split. In case Nvidia gets included in the Dow Jones index, there would be some forced buying by ETFs replicating the index, which could have a positive impact on Nvidia’s share price As it turns out, Amazon was added to the Dow Jones recently. In fact, it was earlier this year in February. So let’s take a look at how Amazon’s stock price performed post stock split when it was added to the Dow Jones. And that will give us some good idea how Nvidia stock might perform post split as well. After it gets announced that it will be added to the Dow Jones on February 24th, 2024, Amazon joined the Dow Jones Industrial Average. The announcement was made four days prior on February 20th, 2024. As you can see here on this chart, from the four days where the Dow Jones inclusion was announced to the point that it was actually included and started trading that morning, Amazon rose significantly. So for a four day trade from the point where Nvidia gets announced that it’s being added to the Dow Jones Industrial Average, to the point where it actually does get added to the Dow Jones Industrial Average during those four days. We have an incredible opportunity to buy the stock and sell it four days later. Or if you want to maximize profits, buy a call option on the stock and see an even greater profitability on your trade. But again, this is a short term trade. Looking at the daily chart from that four day period where Amazon was announced that it was being added to the Dow, to the day it was actually added to the Dow, it was like a blip on the radar. It barely made an impact on the stock on the daily chart. So again, this is a short term trade. This does not have a major impact long term. To be clear, Nvidia has not yet been announced that it will be added to the Dow Jones Industrial Average, but an announcement is expected soon possibly as early as next week once the stock split occurs. Now, that said, these are both short term trades. Both the stock split as well as the Dow Jones inclusion are short term trades. What about for long term investors? If the stock split does not make an impact long term? And if the Dow Jones inclusion does not make an impact long term, what does? Well, the answer is fundamental analysis. Let’s go through the fundamental analysis on Nvidia. Then let’s take a look at the technical analysis. First. Starting with some positive catalysts that could push Nvidia even higher in video over the weekend announced new AI chips. Just months after its latest launch, Nvidia CEO Jensen Huang announced the new AI chip architecture, dubbed Rubin, ahead of the Computex tech conference in Taipei. Rubin comes months after the March announcement of the upcoming Blackwell model, which is still in production and expected to ship to customers later in 2024 and throughout all of 2025. Huang’s announcement of Rubin appears to quicken the company’s already accelerated pace of AI chip advancements. The turnaround from Blackwell to Rubin was matter of less than three months, underscoring the company’s competitive frenzy in the AI chip market and Nvidia’s Sprint to preserve its dominant spot. To clear up any confusion about this, Blackwell has not yet started shipping will ship at the end of 2024, and it will ship throughout 2025. Orders for Blackwell and other Nvidia chips are fulfilled all the way through 2025. If anybody orders an Nvidia chip for AI at this point, they’re not going to receive those chips until 2026. That’s how backed up Nvidia is with their chip shipments at this time. Now, Rubin is expected to start shipping in 2026 and throughout 2027. So this will be the next generation of AI chips. And this is essentially Nvidia’s game plan. Through the end of 2027, the Rubin chip platform will have new GPUs. It will come with other new features like a central processor called Vera. Although the Sunday announcement did not provide very many details about this chip, that’s still at least two years away. So while there aren’t a lot of details about this new Rubin chip yet, I do believe the reason that Nvidia has gone ahead and announced it so early is because they’ve already hit their maximum production capacity on their Blackwell chips, and they need to start making sales for 2026 and 2027. In order to do that, they had to announce the Rubin chip, and that’s why they went ahead and announced it. Now, of course, the reason Nvidia wants to get customers buying chips into 2026 and 2027 today rather than waiting, is because Nvidia’s competition is heating up. And if customers wait to buy chips, there might be a lot of good competitors on the market 2 or 3 years from now that might make Nvidia chips less exciting Nvidia dominates the AI chip market for now, but there’s more competition than ever. Nvidia’s GPU isn’t alone in being able to run the complex math that underpins generative AI. If less powerful chips can do the same work, hung might be customers As cloud providers including Google, Microsoft and Amazon are all building processors for internal use. Amazon introduced its own AI oriented chips in 2018 under the inferentia, whatever that’s called. Brands in 2021, Amazon Web Services debuted Trainium. Targeted to training. Google is perhaps the cloud provider most committed to its own silicon. The company has been using what it calls the Tensor Processing Units, or TPUs, since 2015 to train and deploy AI models. Google also uses Nvidia chips, though, and offers them through its cloud. Meta needs massive amounts of computing power to run its software and website and to serve ads, while the Facebook parent company is buying billions of dollars worth of Nvidia processors. It said in April that some of its homegrown chips were already in data centers and enabled greater efficiency compared to GPUs. And with competition heating up, this means Nvidia’s growth rate is going to slow down. Nvidia is going to be forced to start lowering the cost on some of their chips, which in turn is going to hurt their profit margins. That in turn is going to hurt their profits. And in fact, we are already starting to see this. If we look at the earnings per share growth quarter over quarter, it has consistently been slowing down. Four quarters ago to three quarters ago, it was 49% quarter over quarter growth. Then three quarters ago to two quarters ago, it was only 32% quarter over quarter growth. And then two quarters ago to last quarter, it was only 21% quarter over quarter growth. So you can already see the growth rate in Nvidia stocks slowing down significantly. The other risk to Nvidia is a slowdown in the overall economy, or more importantly, a slowdown in their customers ability to invest in AI chips. In order for Nvidia’s customers to invest in AI chips, they need to have the money and the sales and the revenue in order to put towards buying Nvidia’s chips. If Nvidia’s customers start to see a slowdown in revenue or profits, then they’re not going to have as much money to buy Nvidia chips, and that’s going to directly impact Nvidia sales. Unfortunately, software stocks got pummeled last week after a cluster of troubling earnings reports. There’s a lot of software companies that are related to Nvidia and a lot that aren’t. I want to specifically focus on Dell because Dell sells a lot of Nvidia chips through its servers. Dell, which sells PCs and data center hardware to businesses, bumped up its full year forecast on Thursday and said its backlog for AI servers has grown to 3.8 billion from 2.9 billion three months ago. But the growing portion of these servers in the product mix, along with higher input costs, that’s inflation, will cause the company’s gross margin to narrow by 150 basis points for the year. As a result, Dell shares slid 13% for the week after hitting fresh highs The company has been viewed as a beneficiary of the generative AI wave as businesses set up their hardware purchases. But the stock slid because expectations were elevated, and this is what long term investors in Nvidia have to get right. Investors in Nvidia have to understand the difference between a great company and a great stock. There are a lot of great companies out there, but they don’t necessarily have great stocks. A great company is one that’s growing that’s profitable, has a ton of cash on hand, constantly producing new products. Everything that Nvidia is in any way, shape or form, you look at it. Invidia is a great company and certainly a company that I would want to own and be invested in, but that does not mean the stock is a great buy, and that’s because a stock can be extremely overvalued. A company can be worth a certain amount, but the stock can be worth significantly less or significantly more than what the company is actually worth. And that’s where we have to look at fundamental analysis. Fundamental analysis looks at what the company is worth. It looks at what the stock is currently priced at. And it asks the question, is the stock too expensive or is the stock too low? In other words, is the stock a buy or is the stock a sell? Nvidia’s current price to earnings ratio is 85, and its 2028 forward p e ratio is 22. Keep in mind that its 2025 forward p e ratio, or the one year forward p e is 40, with a one year forward p e ratio of 40. That gives Nvidia a valuation grade of F, by the way, these valuations come from seeking alpha. This is a mathematical formula. This is not an opinion. So a one year forward PE of 40. How does that stack up with the average forward p e in the S&P 500. Well the average forward p e ratio in the S&P 500 is 19. Now a lot of people would say yeah. But Scott, the reason the forward p e ratio is so high is because of Nvidia’s growth rate. And what you have to understand is this the forward p e ratio already includes the expected growth rates, the p e ratio, the p e ratio of 85. That does not include the forward expected growth of Nvidia. That’s why we’re not using it. But the forward p e ratio already includes the expected growth on Nvidia, with Nvidia’s expected growth of about 108% this year. In Vidia’s forward p e ratio is more than double that of the average S&P 500 stock, meaning that Nvidia itself the stock is more than double its fair valuation. Purely looking at the fundamentals and not looking at anything else in Nvidia should be worth $500 per share. That is the fair valuation of Nvidia as a company. Nvidia as a company is worth $500 per share, but the stock is currently trading at $1,100 per share. So why is the stock price and the company valuation so different? Well, it all has to do with the fact that a stock price is worth whatever people are willing to pay for it. And during times of speculative cycles or hype or FOMO or whatever you want to call it, stocks tend to run up significantly higher than what they should be trading at. And yes when stocks rally, they eventually fall back down to fair valuation. They always do. The only question is when Amazon stock from 2000 to 2003 is a great example of this. During the.com bubble, Amazon stock absolutely rallied. But when the stock eventually fell back down to fair valuation, the stock price in Amazon fell by more than 90%. As the investment boom rises and falls, chip companies demand is prone to cyclical fluctuations making them vulnerable to serious setbacks. Seasoned Nvidia investors are unlikely to overlook this fact. Just like in 2022, they also experienced a 65% drop in Nvidia share price. Now, a lot of you may be saying, yeah, Scott, but look what happened to Amazon stock. Sure, it fell by over 90%, but if you had just held 20 years later, you would have been in a great position. And you know what? You’re absolutely correct. If you buy Nvidia stock at the current prices by the year 2029, you will be back to fair value By the year 2030, the stock should be up and up significantly. So if you’re willing to wait six years at least at a minimum, you are going to make money buying Nvidia stock at these prices. My question to you is why would you want to wait six years to break even or make a little bit of money on a stock? Why wouldn’t you want to wait for the stock price to fall so that you can buy a lot more shares at a much lower price, have a significantly lower buy in price, and then be able to make way more money than the people who are buying here when the stock is trading at double its fair valuation. I personally don’t want to buy stocks based upon where they’re going to be ten years from now. I want to buy stocks based upon whether or not they’re fairly valued today. And this kind of investing is the same thing that Warren Buffett does. Back in 2000 and 2001, Warren Buffett famously said that stock market valuations were high, and that’s why Berkshire Hathaway was heavy in cash in 2000 and 2001. But do you know what Berkshire Hathaway did in 2003? They bought up the stock market. They took all that cash they had been holding, and they bought up stocks at dirt cheap valuations. And what is Warren Buffett doing today? Well, here in 2024 Warren Buffett says once again, stock market valuations are too high and Berkshire Hathaway is loaded up on cash. Berkshire Hathaway is waiting for an eventual drop in stocks, and they are waiting to buy up stocks that really cheap, low and fair valuations. From a fundamental long term standpoint, that is what I would be doing. I wouldn’t buy here because I don’t want to wait ten years to break even on my money. I want to buy at low valuations so I can start making money right away. There are over 8000 stocks in the stock market. Don’t get too caught up on one. Let’s go trade a few other stocks and let’s come back to Nvidia. Once it’s had a little bit of a pullback. Now as far as if Nvidia will have a pullback when that might occur. And whether Nvidia is still a buy for a short term trade. Let’s go take a look at the technical analysis on Nvidia stock. Let’s start with a monthly chart. And let’s work our way down to smaller time frames on the monthly chart. Nvidia’s RSI is sitting at 85. This is an absolutely insanely high RSI and is rarely ever seen on a monthly chart. On a stock. It screams Nvidia is overbought and due for a pullback. However, investors need to be well aware that the RSI is a terrible indicator of timing of pullbacks. A great example of this can be seen on the weekly chart. On the weekly chart, Nvidia’s RSI is at 78, well above the 70 threshold to be overbought. However, again, the RSI is a terrible indicator of timing. If Nvidia has remained above 65 and the RSI for 18 straight months, Nvidia will eventually have a pullback. But timing it is nearly impossible. With that said, let’s take a look at the daily chart and see if we have any more indicators of a pullback and in fact, we do have a few showing that at least in the very short term, Nvidia is a bit overbought and might go down next week. One of those is the Bollinger Bands. We see how Nvidia stock fell above the Bollinger Band. The two standard deviation and very often we’ll get back down to the middle line the 20 standard moving average. And on top of that we have the TTM squeeze which is turned dark green indicating the stock is topping out and about to go back down. For those of you not familiar with the TTM squeeze, generally when it turns dark green, that’s the top of the stock and we’ll see the stock fall like we did back here in late 2023. However, like all technical analysis, it’s not 100% guaranteed. In fact, there are five points in 2024 where Nvidia’s TTM squeeze showed the stock topping out. And it just kept going higher and higher and higher. So one technical indicator by itself is not enough to make a trade. Now, the TTM squeeze did become successful back in March of 2024. And we did in fact see Nvidia stock fall. So at least Nvidia does follow the TTM squeeze sometimes. Once again the TDM squeeze is showing Nvidia stock is about to fall. But whether or not it does is really going to depend upon investor sentiment and how much FOMO and hype there is around the upcoming stock split and possible Dow Jones Industrial Average inclusion. So with Nvidia stock, because it does not follow technical analysis that well and tends to rise no matter what the technicals show, it’s very, very difficult to use technical analysis to make any sort of good determination. As far as where Nvidia stock is going to go in the future, Nvidia is one of those stocks. You really just have to focus on market momentum and market sentiment to know where it’s going to go. That said, if anything changes on Nvidia and if any trade show up, I will be sure to alert them in the discord. And boy oh boy, have we been making money in that discord. Friday, less than one hour before the close, fuzz alerted an ESP call option. From the point he alerted the stock market absolutely rallied on Friday and I made a 2,600% profit. I turned $180 into $4,251 in less than one hour. If you want to potentially make money like this in your portfolio come join us in the discord. You can join us in the discord at We profit.io discord that’s we profit.io discord.

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