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Founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem, Nvidia Corp. (Nasdaq; ticker NVDA) is a full-stack computing infrastructure company and currently the second largest corporation in the world by market capitalisation (US$3.170 trillion), having recently surpassed Microsoft (Nasdaq; ticker: MSFT). Apple (Nasdaq; ticker: AAPL) currently holds the top spot, with an eye-popping market value of US$3.409 trillion.
Nvidia, a pioneer in the production of GPUs (Graphics Processing Units) back in 1999, employs around 30,000 people today and is the world’s largest GPU manufacturer. Nvidia's primary business model has evolved over the years from 3D graphics for the gaming and multimedia markets to Artificial Intelligence (AI) solutions for enterprises. With an 80% share of the market, the company’s Data Centre GPU is said to be responsible for most of its ongoing growth. Nvidia’s market dominance took off in late 2022 after the launch of ChatGPT and has since been bolstered by the increased spending on AI.
The company’s latest 10-k annual report noted the following regarding their GPUs:
‘The GPU was initially used to simulate human imagination, enabling the virtual worlds of video games and films. Today, it also simulates human intelligence, enabling a deeper understanding of the physical world. Its parallel processing capabilities, supported by thousands of computing cores, are essential for deep learning algorithms. This form of AI, in which software writes itself by learning from large amounts of data, can serve as the brain of computers, robots and self-driving cars that can perceive and understand the world. GPU-powered AI solutions are being developed by thousands of enterprises to deliver services and products that would have been immensely difficult or even impossible with traditional coding. Examples include generative AI, which can create new content such as text, code, images, audio, video, and molecule structures, and recommendation systems, which can recommend highly relevant content such as products, services, media or ads using deep neural networks trained on vast datasets that capture the user preferences’.
Unlike investing in physical shares of Nvidia, which entail partial ownership of the company, investing in Share CFDs (Contract for Differences) permits speculation (and hedging) based on Nvidia’s stock price movement without the need for direct ownership.
It is imperative to understand that CFDs are traded in the over-the-counter market (OTC) and are offered as derivative products. Therefore, irrespective of whether you trade CFDs on Nvidia, Stock Indices, Gold (XAU), the Euro (EUR) or even Digital Currencies, like Bitcoin (BTC) or Ethereum (ETH), all CFD positions are based on the underlying asset’s price movement and are always cash-settled transactions.
With FP Markets, NVDA shares (CFDs) can be traded between 16:30 and 23:00 GMT+3 (Monday to Friday) and are generally traded with leverage. To help explain how leverage works in the CFD market, let’s assume that you are an investor interested in purchasing 200 shares of Nvidia, hypothetically trading at US$100 per share. To purchase 200 company shares would set the investor back US$20,000 (ignoring any commissions or fees). On the other hand, a CFD investor could trade an equivalent position size but only ‘put up’ 20% of the initial investment value (referred to as the initial margin) with FP Markets. While this example also ignores any commissions or fees to trade Share CFDs, the investor, in this instance, would only need to ‘deposit’ US$4,000.
1. Open an FP Markets Forex and CFD Trading Account
To invest in Nvidia Share CFDs, you must open a live trading account with FP Markets.
Simply visit the FP Markets homepage, click ‘OPEN LIVE’ and begin the Application process.
2. Download your Trading Platform
Once you have registered for your FP Markets trading account, use your login credentials (which will be emailed to you) and access the FP Markets Client Portal.
The Portal is designed to allow traders to carry out several functions, including selecting trading platforms. Using the menu on the left (see image below), select ‘Platforms’ and choose your preferred trading platform.
Two of the most popular platforms for Share CFD trading are MetaTrader 5 (MT5) and cTrader.
3. Find the NVDA Ticker
Finding tickers on the MT5 platform can be done through the Market Watch tab (Ctrl+M). Either enter the ticker of interest in the ‘click to add’ function (in this case, ‘NVDA’) at the bottom and select the stock to create a new row, or right-click in Market Watch and select ‘Show All’.
To open the NVDA chart, drag/drop the stock from the Market Watch to the chart’s interface on the right, or right-click the stock and select ‘Chart Window’.
4. Place the Buy or Sell Order
You can access MT5’s order window by pressing F9 or right-clicking the Trading Terminal (Ctrl+M) and selecting ‘New Order’. This allows several different entries, from Trading Volume to Stop-Loss values. An alternative order execution method is one-click trading (visible in the chart's upper left corner below), though this is largely employed among day traders and scalpers (short-term trading).
Share CFDs – Long and Short Trading Positions:
Nvidia undoubtedly dominates its competition. The days when Advanced Micro Devices (Nasdaq; ticker: AMD) and Nvidia were side by side in the race to rule the gaming market are long gone. Nvidia has been the largest beneficiary of AI, given that large technology companies continue to update and release new technology that requires GPUs. These companies include Alphabet (Nasdaq; ticker: GOOGL), Meta (Nasdaq; ticker: META), Microsoft (Nasdaq; ticker: MSFT), and OpenAI.
Nvidia’s Q2 24 earnings (released in August) revealed that revenue rose by a remarkable 122% (year on year) and was up 15% compared to Q1 24. The company’s net income also rose to US$16.6 billion (more than double the previous year). Nvidia provided upbeat guidance, with Jensen Huang, its founder and CEO, commenting: ‘Hopper demand remains strong, and the anticipation for Blackwell is incredible. Nvidia achieved record revenues as global data centers are in full throttle to modernize the entire computing stack with accelerated computing and generative AI. Blackwell samples are shipping to our partners and customers. Spectrum-X Ethernet for AI and Nvidia AI Enterprise software are two new product categories achieving significant scale, demonstrating that Nvidia is a full-stack and data center-scale platform. Across the entire stack and ecosystem, we are helping frontier model makers to consumer internet services, and now enterprises. Generative AI will revolutionize every industry’.
According to Refinitiv data, most analysts are currently bullish on the NVDA stock; less than 10% recommend a hold. The current Median Price Target for the NVDA stock is US$150.00, while the Mean Price Target is US$148.23.
Regarding chart studies, while a fleeting – albeit rather punchy 35% – correction recently unfolded in the NVDA stock, price action is closing in on recent all-time highs of US$140.76, with limited long-term technical resistance standing in its way.
Basic chart analysis shows that the NVDA stock remains a buyers’ market; the trend is clear on the weekly timeframe and price recently rebounded from a weekly trendline support, taken from the low of US$10.81.
For those who follow pattern studies, you may acknowledge the bullish pennant formation (some may also refer to this as a symmetrical triangle given the triangle’s size to that of its pole), derived from the all-time high of US$140.76 and US$90.69. Weekly price action ruptured the upper boundary of said pattern in recent weeks and is powering towards US$140.76.
The daily chart recently moved through resistance at US$130.79, now serving as possible support. Air space is limited, nevertheless, as resistance from US$133.83 and the upper limit of a rising wedge pattern (drawn from the high of US$120.79) recently entered the fight. Breaking these resistance levels would help confirm the bullish intent seen on the weekly chart and technically open the door back to all-time highs.
Chart Created Using TradingView
Investing in physical shares, particularly for long-term investors, is generally done through a cash account (purchasing NVDA shares without using a margin account – borrowed funds). This is commonly done through an investment brokerage (a ‘nominee shareholder’), which holds the shares that are purchased by the ‘beneficiary shareholder’.
Both share dealing and CFDs are similar in that investors benefit from a rise in the company’s share price and can also benefit from dividend payments if the company offers them. Voting rights, however, are often attached to the company's physical shares (some companies opt to offer more classes of shares, and these may not offer voting rights).
Futures and options are financial derivatives that investors can use to speculate and hedge on the underlying price of NVDA. However, unlike CFDs, delivery of the underlying asset is possible with futures and options, though this is seldom done (many choose to settle in cash before the expiration date).
Futures and options contracts are generally exchange-traded products. The former obligates both parties of the contract to transact at a predefined future date and price. At the same time, the latter provides the contract holder (the buyer) with the right but not the obligation to transact at a future date/price (the writer [seller], however, is obligated to transact either at or before the expiration date).
An ETF, a pooled investment vehicle that trades on a stock exchange, could be another alternative investment option to explore. While single-stock ETFs have been available for approximately two years, traditionally, ETFs track the performance of indexes like the S&P 500 and the DAX 40.
In view of this, it is important to understand that if you invest in traditional, passively managed ETFs, the performance of the ETF and NVDA will not mirror each other. Benefits of ETFs include diversification (spreading your risk), accessibility, liquidity, and cost-effectiveness.
1. Does NVDA pay a dividend?
Yes, NVDA currently pays an annual dividend of 0.03%.
2. What are the major differences between CFDs and physical shares?
While CFDs and physical shares hold similarities, ownership and leverage are key differences between the two investment options.
CFDs are derivatives and do not permit ownership of the company’s shares, while physical shares assign partial ownership rights. In terms of leverage, as noted in the article, most long-term investors tend to invest in shares via a cash trading account, thus investing void of a margin account (leverage), while investing in CFDs is often done with greater leverage.
3. Can I trade NVDA on MT5?
With FP Markets, NVDA can be traded on MT5 and cTrader.
4. What are the trading hours for NVDA?
The trading hours for NVDA are between 16:30 and 23:00 GMT+3 (Monday-Friday).
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