The stock market ended 2023 on a high note, as the Nasdaq Composite rose 21.4% for the year, its best performance since 2009. The S&P 500 and the Dow Jones Industrial Average also posted solid gains, up 16.8% and 13.5%, respectively. Among the leading stocks, Nvidia (NVDA) was the star performer, surging 224% in 2023 and setting up for another potential breakout in 2024. Meanwhile, Tesla (TSLA) faced some headwinds, as it awaited its fourth-quarter delivery numbers amid supply chain challenges and increased competition.
Nvidia, the world’s largest chipmaker by market value, had a stellar year in 2023, as it benefited from strong demand for its graphics cards, data center products, and artificial intelligence solutions. The company also made significant progress in its planned acquisition of Arm, the British chip designer, which could give it an edge in the mobile and Internet of Things markets.
Nvidia’s earnings and revenue growth were impressive, as it beat Wall Street’s expectations in every quarter. In the third quarter, Nvidia reported earnings of $1.17 per share, up 89% year over year, on revenue of $7.1 billion, up 50%. The company also raised its guidance for the fourth quarter, projecting revenue of $7.4 billion, up 44%.
Nvidia’s stock price reflected its strong fundamentals, as it soared from $131.60 at the end of 2022 to $426.50 at the end of 2023, a gain of 224%. The stock also outperformed its peers in the semiconductor industry, such as Intel (INTC), AMD (AMD), and Qualcomm (QCOM), which rose 18%, 56%, and 32%, respectively.
Nvidia is not resting on its laurels, as it continues to innovate and expand its product portfolio. The company recently launched its GeForce RTX 30 series of gaming graphics cards, which offer superior performance and ray tracing capabilities. The company also unveiled its Grace CPU, its first data center processor, which is designed to power the most complex AI and high-performance computing workloads. In addition, Nvidia announced its Omniverse platform, a cloud-based collaboration tool that enables 3D creators to work together in real time.
Nvidia is also well-positioned to capitalize on the emerging trends in the chip industry, such as the shift to the cloud, the rise of edge computing, and the adoption of 5G. The company’s leadership in AI, which is the key driver of innovation and growth in the chip sector, gives it a competitive advantage over its rivals.
As of December 30, Nvidia’s stock was trading near its all-time high of $434.50, which it reached on December 27. The stock formed a three-weeks-tight pattern, which is a bullish consolidation that often precedes a breakout. The buy point for Nvidia is $456.23, which is 5% above the high of the pattern. Nvidia’s relative strength line, which compares its performance to the S&P 500, is also near its high, indicating strong momentum.
Tesla Faces Pressure from Rivals and Regulators
Tesla, the world’s most valuable automaker, had a mixed year in 2023, as it faced some challenges from competitors, regulators, and its own ambitious goals. The company’s stock price fluctuated throughout the year, as it struggled to maintain its growth rate and profitability amid supply chain disruptions and rising costs.
Tesla’s earnings and revenue growth were uneven, as it missed Wall Street’s expectations in two out of four quarters. In the third quarter, Tesla reported earnings of $0.62 per share, down 27% year over year, on revenue of $13.8 billion, up 57%. The company blamed the lower earnings on higher operating expenses, lower regulatory credit revenue, and lower average selling prices. The company also lowered its guidance for the full year, saying it expects to deliver between 840,000 and 860,000 vehicles, down from its previous target of 900,000.
Tesla’s stock price reflected its inconsistent performance, as it dropped from $705.67 at the end of 2022 to $649.86 at the end of 2023, a decline of 8%. The stock also underperformed its peers in the electric vehicle industry, such as Nio (NIO), Lucid (LCID), and Rivian (RIVN), which rose 34%, 112%, and 28%, respectively.
Tesla faced some headwinds from its rivals, as the electric vehicle market became more crowded and competitive. The company lost some market share in China, its second-largest market, to local players such as Nio, Xpeng (XPEV), and Li Auto (LI). The company also faced new challengers in the US, such as Lucid and Rivian, which launched their luxury sedan and pickup truck models, respectively. In addition, Tesla faced pressure from legacy automakers, such as Ford (F), GM (GM), and Volkswagen (VWAGY), which ramped up their electric vehicle offerings and investments.
Tesla also faced some scrutiny from regulators, as it dealt with several investigations and lawsuits related to its Autopilot system, its solar roof tiles, and its labor practices. The company’s CEO, Elon Musk, also stirred some controversy with his tweets and comments, such as his criticism of the Biden administration, his pledge to sell 10% of his Tesla shares, and his announcement that he moved to Texas.
Tesla is not giving up, as it continues to pursue its vision of accelerating the transition to sustainable energy. The company is expanding its production capacity, with new factories in Texas and Germany. The company is also developing new products and technologies, such as the Cybertruck, the Semi, the Roadster, and the Full Self-Driving software. In addition, Tesla is diversifying its revenue streams, with its energy business, its battery sales, and its potential entry into the insurance market.
As of December 30, Tesla’s stock was trading near its 50-day moving average, which is a key support level. The stock formed a cup-with-handle pattern, which is a bullish formation that often precedes a breakout. The buy point for Tesla is $780.89, which is 10 cents above the high of the handle. Tesla’s relative strength line, which compares its performance to the S&P 500, is below its high, indicating weak momentum.
