We have an exceptional opportunity to invest in Nvidia (NVDA) following President Donald Trump’s announcement of Project Stargate, a major initiative to advance AI technology. NVDA, with its cutting-edge GPU technology, is at the forefront of AI, machine learning and high-performance computing, making it an ideal candidate to leverage this project. While the initiative aims to improve national security, healthcare and economic competitiveness through AI, NVDA’s expertise in these areas positions it for substantial growth. If we look at the chart of NVDA, it has been trading in a range of $130 and $150 since October and is ready for a possible breakout higher. The stock’s momentum (RSI) suggests there is considerable room for further appreciation in the near term. And based on the magnitude of the rally within the trading range, a breakout higher would target $180 as an initial upside target. Basically, NVDA is significantly undervalued. While NVDA trades at a premium to its peers of 31 times forward earnings versus the industry median of 20 times, its superior growth metrics and profitability justify this valuation. NVDA has expected EPS growth of 65% (industry: 14%) and expected revenue growth of 57% (industry: 7%). In addition, its net margins, among the best in the sector, stand at an impressive 56%, compared to 20% for the sector. These figures highlight NVDA’s ability to outperform its competitors in terms of profitability and growth, suggesting that despite its premium valuation, there remains substantial upside potential. NVDA Superior Financial Results: Forward PE Ratio: 31.16x vs. Industry Median 19.76x Expected EPS Growth: 64.73% vs. Industry Median 13.67% Expected Revenue Growth: 57 .44% vs. industry median 6.71% Net margins: 55.69% vs. industry median 19.87 % The business Capitalizing on NVDA’s potential in Project Stargate, we suggest using a bull call spread. Specifically, buy the March $141/$165 vertical call with a drawdown of $7.63. This involves: Buying the March $141 call for $11.33 Selling the March $165 call for $3.70 This trading structure offers: A maximum reward of $1,637 per contract if NVDA is greater than $165 at expiration. A maximum risk of $763 per contract if NVDA is below $141 at expiration. The break-even point is $148.63, calculated as the lowest strike price plus the net debit paid. (See this trade with updated prices on OptionsPlay.) This strategy allows you to benefit from NVDA’s expected growth, driven by Project Stargate’s focus on AI, providing leverage on the movement of security while capping the risk of a drop in the premium paid. With NVDA’s strong technical setup and superior fundamentals, this transaction aligns well with the optimistic outlook for the company’s future under the influence of this important government initiative. DISCLOSURES: (None) Any opinions expressed by CNBC Pro contributors are their opinions alone and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously distributed by them at television, radio, Internet or other media. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO PURCHASE ANY SECURITIES OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT THE UNIQUE PERSONAL CIRCUMSTANCES OF ANY INDIVIDUAL. THE ABOVE CONTENT MAY NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISION, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
Nvidia could be a big winner from Trump’s Stargate AI project. How to Maximize Profits in Trading
