Why NVIDIA Stock surged 5.1% Friday – The Motley Fool

Graphics chip specialist actions NVIDIA (NASDAQ: NVDA) jumped 5.1% to close at $ 281.02 per share on Friday. This level is far from the closing stock price of $ 283.70 set on September 4th.

For the context, the S & P 500 closed the session flat.

Friday's winning day brings the return of cherished technology to 45.5% in 2018, compared to 10.6% for the S & P 500.

Here's what investors should know.

NVIDIA Stock is updated from Wall Street

We can attribute the rise in NVIDIA's stock on Friday to the Evercore ISI analyst who covers the stock. He raised his price target to $ 400 per share, instead of $ 300, while reiterating his outperformance rating. This price target, which would be the highest ever recorded among Wall Street companies, represents a 42% increase over Friday 's closing stock price.

Evercore's rating underscored NVIDIA's long-term growth potential across all segments, but it summed up the main reason for the surge, claiming that NVIDIA "would be at the forefront of the company's transformation into IA ". [artificial intelligence] standard platform, "according to several published reports.

I certainly do not disagree with that, but I would go one step further: the critical point has already been reached, in my opinion, at least for the critical training component of AI in the centers of data. All the giants of technology, including Amazon.com, AlphabetGoogle, IBM, and Microsoft, have adopted NVIDIA's GPU-based AI platform. While processors still dominate the AI ​​deduction phase in data centers (implying that machines are applying what they've learned through their training to new data), NVIDIA is in the process of breaking through in this area.

What's an investor to do?

I have been optimistic about NVIDIA since the end of 2016, when I started to cover the stock. This is mainly due to its dominance of the AI ​​training market for data centers, but also to its leading position in gaming graphics cards and its potential to conquer much of the growing market for autonomous vehicles . So my opinion remains that investors should buy NVIDIA shares.

Yes, it's almost at its highest level, and that's scary to some investors. But keep in mind that every stock goes up, it continually sets new highs, even if they are not consecutive. So decide not to buy a stock only because it's near or at a new top does not make sense. In addition, withdrawals are never guaranteed. And, more importantly, if you buy NVIDIA at $ 281 per share now or if you're lucky enough to have it, say, $ 240 in the near future, it will make very little difference in the long run if the company maintains its dominant AI center position and plays, and succeeds in the driverless vehicle space.

The best way to invest is to reach an average dollar cost up to your initial position. (This means that you invest the same amount at a given interval, for example every quarter.) This ensures that you will not buy all your shares at the highest level of action for a certain period of time. Transaction costs are very low when you use an online discount broker, making the monetary average a viable strategy for many investors.