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1 Stock To Buy, 1 Stock To Dump This Week: Nvidia, Meta Platforms

By Jesse Cohen/Investing.comStock MarketsSep 18, 2022 09:43AM ET
www.investing.com/analysis/1-stock-to-buy-1-stock-to-dump-this-week-nvidia-meta-platforms-200629977
1 Stock To Buy, 1 Stock To Dump This Week: Nvidia, Meta Platforms
By Jesse Cohen/Investing.com   |  Sep 18, 2022 09:43AM ET
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  • Fed rate hike, Powell comments to drive sentiment
  • Nvidia stock is a buy ahead of its GTC conference
  • Meta Platforms set for more losses amid ongoing headwinds

Stocks on Wall Street tumbled on Friday, with the major averages suffering their biggest weekly loss since June, as investors continued to fret over looming interest rate hikes, soaring inflation, and slowing economic growth.

A shock profit warning from global shipping giant and economic bellwether FedEx (NYSE:FDX) further stoked recession fears.

For the week, the blue-chip Dow Jones Industrial Average sank 4.1%, while the benchmark S&P 500 and the tech-heavy Nasdaq Composite declined 4.8% and 5.5% respectively.

Source: Investing.com

The week ahead is likely to be another volatile one, with the Federal Reserve widely expected to deliver its third straight jumbo-sized 75-basis-point rate hike at the conclusion of its policy meeting on Wednesday.

Besides the Fed, this week’s economic calendar consists of important housing data as well as the latest PMI surveys on manufacturing and services sector activity.

Meanwhile, on the earnings docket, there are just a handful of corporate results due, including those from FedEx, Costco (NASDAQ:COST), General Mills (NYSE:GIS), Darden Restaurants (NYSE:DRI), KB Home (NYSE:KBH), and Lennar (NYSE:LEN).

Regardless of which direction the market goes, below we highlight one stock likely to be in demand and another which could see further downside.

Remember though, our timeframe is just for the upcoming week.

Stock To Buy: Nvidia

Despite its recent downtrend, I expect Nvidia’s (NASDAQ:NVDA) stock to put in a strong performance in the week ahead as the tech giant hosts its highly anticipated GTC conference, at which it is likely to show off its latest chip and software advancements.

Nvidia is one of the global leaders in providing graphic processing units for gaming consoles, data centers, and self-driving vehicles.

The four-day online event kicks off on Monday, Sept. 19 and runs through Thursday, Sept. 22, and will be broadcast live on the Nvidia website.

Most of the spotlight will fall on founder and CEO Jensen Huang’s keynote speech, scheduled for Tuesday at 11 A.M. ET.

According to the description, Huang will talk about the latest breakthroughs in emerging trends that are driving transformation in the tech industry, such as artificial intelligence, deep learning, quantum computing, virtual collaboration, and more.

Other members of Nvidia’s leadership team are also expected to reveal fresh details on the company’s new products and features in computer graphics, data science, medical science, robotics, and the metaverse.

At its last GTC conference in March 2022, NVDA shares jumped nearly 10% after showcasing its innovative "Omniverse" metaverse platform and revealing upbeat news on graphics, gaming, and autonomous self-driving technology.

Nvidia Weekly Chart
Nvidia Weekly Chart

Source: Investing.com

NVDA stock - which has ended lower in five of the last six weeks - fell to its weakest level since March 2021 on Friday, before recovering slightly to close at $131.99.

Year to date, Nvidia’s shares are down 55% and are roughly 62% below their record high of $346.47 touched in November 2021.

At current levels, the Santa Clara, Calif.-based semiconductor giant has a market cap of $328.5 billion.

Stock To Dump: Meta Platforms

In my view, Meta Platforms’ (NASDAQ:META) stock - which sank to its weakest level since March 2020 on Friday - could suffer another challenging week amid ongoing worries over the negative impact of several factors plaguing the out-of-favor social-media giant.

Facebook parent Meta has seen its valuation collapse this year due to a sluggish performance in its core ad business resulting from privacy changes in Apple's (NASDAQ:AAPL) iOS, as well as growing competition from Chinese video-sharing app TikTok.

The ad-reliant social-media company badly missed profit and sales growth expectations when it released Q1 results in late July, and it warned that sales would decline again in Q2 amid the sharp slowdown in digital ad spending.

In addition, concerns are growing over Meta’s big bet to build and develop the metaverse as it continues to spend heavily amid rising costs and investments.

Meta Weekly Chart
Meta Weekly Chart

Source: Investing.com

META stock, which plunged 13.5% last week to suffer its worst weekly performance since January, closed at the lowest since the start of the COVID pandemic at $146.29 on Friday.

At current levels, the Menlo Park, Calif.-based company is valued at $393.1 billion.

The Mark Zuckerberg-led company has seen its stock tumble by 56.5% year to date, by far the biggest decline among big tech stocks and more than double the drop in the Nasdaq.

Even more alarming, shares are about 62% below their record high of $384.33 touched in August 2021 amid a potent combination of worsening fundamentals and a deteriorating macro backdrop of higher interest rates and accelerating inflation.

In general, expectations of tighter Fed policy and higher yields tend to weigh heavily on tech companies with lofty valuations, as it makes their future cash flows less valuable and hinders their ability to fund their growth.

Disclosure: At the time of writing, Jesse has no position in any stock mentioned. The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.

***

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1 Stock To Buy, 1 Stock To Dump This Week: Nvidia, Meta Platforms
 

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1 Stock To Buy, 1 Stock To Dump This Week: Nvidia, Meta Platforms

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Comments (9)
Jimmy Richardson
Jimmy Richardson Sep 20, 2022 4:08AM ET
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buy NVDA before an event...that stupid. sell meta at 148?? that's also stupid.
Muhammad Sajjad Muhammad Sajjad
Muhammad Sajjad Muhammad Sajjad Sep 20, 2022 4:08AM ET
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Muhammad Sajjad Muhammad Sajjad
Muhammad Sajjad Muhammad Sajjad Sep 20, 2022 4:08AM ET
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Chris Sundo
Chris Sundo Sep 19, 2022 12:53AM ET
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I'm kind of looking forward to the upcoming BEAR TRAP and subsequent SHORT SQUEEZE ;)
Will Turnage
Bucked_up Sep 18, 2022 8:05PM ET
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How could you not like NVda at this price for long term hold
Edmund Lee
Edmund Lee Sep 18, 2022 8:05PM ET
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Who said META’s social nedia platforms are “out of favor”?
Marty Rankin
Marty Rankin Sep 18, 2022 5:19PM ET
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Not real convinced on NVDA as a buy, maybe a longterm hold. The continued decrease in cryptomining as it migrates to proof of stake will continue to weigh heavy on Nvidia chipsets. Something to consider. I hope this comment was helpful.
Suzanne Slaughter
Suzanne Slaughter Sep 18, 2022 3:05PM ET
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Classic sell at the bottom and buy the top…. You are selling META with 11 P/E and buying NBDA with 45 p/E and that’s after tumbling from $346 still trading at 45 no one will listen to this argument
Ritesh Patel
Ritesh Patel Sep 18, 2022 11:30AM ET
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agreed NVDA is a good buy, and should definitely go up this week, thanks
Peter ONeill
Peter ONeill Sep 18, 2022 11:30AM ET
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Its a good long-term buy - but awful valuation if we are entering a global recession / QT period -  where Semiconductors share prices are often hit hardest. If a recession does emerge, can see Nvidia fall back to pre covid levels at around $70 over the next 12 months (might not hit that low but certainly can see it around the $100 mark - esp when factoring in fall on crypto prices / mining)
Emad Abueid
Emad Abueid Sep 18, 2022 11:04AM ET
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disagree, Meta is a buy...
Mohd Izhar Muslim
Mohd Izhar Muslim Sep 18, 2022 10:32AM ET
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Thanks for the article 💯
 
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