We have an exceptional opportunity to invest in Nvidia (NVDA) after President Donald Trump’s announcement of the Stargate project, a major initiative aimed at advancing AI technology. NVDA, with its cutting-edge GPU technology, stands at the forefront of AI, machine learning, and high-performance computing, making it a prime candidate to leverage this project. As the initiative seeks to enhance 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 traded within a range of $130 and $150 since October and is primed for a potential breakout to the upside. The stock’s momentum (RSI) suggests that there is substantial room for further appreciation in the short run. And based on the size of the rally into the trading range, a breakout to the upside would target $180 as our initial upside target. Fundamentally, NVDA is significantly undervalued. While NVDA trades at a premium relative to its peers of 31 times forward earnings compared to the industry median of 20 times, its superior growth metrics and profitability justify this valuation. NVDA boasts an expected EPS Growth of 65% (industry: 14%) and expected revenue growth of 57% (industry: 7%). Additionally, its industry leading net margins stand at an impressive 56% against the industry’s 20%. These figures highlight NVDA’s capability to outpace competitors in profitability and growth, suggesting that despite its premium valuation, there remains substantial upside potential. NVDA’s Superior Financials: 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 trade To capitalize on NVDA’s potential in relation to Project Stargate, we suggest using a bullish call spread. Specifically, buying the Mar $141/$165 call vertical at a $7.63 debit. This entails: Buying the Mar $141 Call for $11.33 Selling the Mar $165 Call for $3.70 This trade structure offers: A maximum reward of $1,637 per contract if NVDA is above $165 at expiration. A maximum risk of $763 per contract if NVDA is below $141 at expiration. The breakeven point is at $148.63, calculated as the lower strike plus the net debit paid. (View this Trade with Updated Prices at OptionsPlay.) This strategy positions you to benefit from NVDA’s expected growth driven by Project Stargate’s focus on AI, providing leverage on the stock’s movement while capping the downside risk to the premium paid. With NVDA’s strong technical setup and superior fundamentals, this trade aligns well with the optimistic outlook for the company’s future under the influence of this significant government initiative. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
