Benzinga - by Aaron Bry, Benzinga Editor.
The Call: On Wednesday's episode of PreMarket Prep, a daily show hosted by Benzinga, cohost and professional trader Dennis Dick called out NVIDIA Corp (NASDAQ:NVDA) as a name to watch during the session.
Dick made the call before 9am, after March's inflation report came in hotter than expected and while the overall tech market and semiconductor industry stocks were selling off.
The Details: Dick said that NVIDIA, because it is the largest company in the semi space and one of the biggest corporations in the world, would be less impacted by interest rate fears. When the overall market is selling off because of macro headwinds, investors will often look for names like NVIDIA as a ‘flight to safety.'
Quoted: "As much as it looked like the breakout was happening seven or eight days ago for small-cap stocks, that breakout is now officially a fakeout," Dick said. "We are down signifigantly from where we were… don't be suprised if stocks like Nvidia are actually the ones that get bought because people were like I'm selling all of my Nvidia today because this number's hot."
Read Also: Inflation Rises More Than Expected To 3.5% In March, Derails June Rate Cut Hopes
Dick pointed out that even in the event that the Federal Reserve is unable to cut rates at all this year, Nvidia should be able to withstand the economic conditions due to the increasing demand for its products and size.
Other semiconductor stocks that are smaller and more reliant on borrowing money for growth, like Advanced Micro Devices (NASDAQ:AMD), suffered after the inflation data for March came in higher than expected, creating more divergence from Nvidia.
"Nvidia works if we don't get any interest rate cuts," Dick said. "That's why I think a stock like Nvidia is the kind of stock that I would be actually buying today and maybe staying away from all of the interest-rate sensitive stocks."
Price Action: Nvidia, like virtually every other tech stock on the market, opened lower in Wednesday's session. But then, like Dick predicted, traders flocked to the name for safety and the stock shot higher by about 4% intraday. At the time of writing, Nvidia was trading higher by about 1.5%, compared to the SPDR S&P 500 Trust ETF's (NYSE:SPY) drop of about 1%.
Now Read: Fed Minutes Reveal Growing Unease Over Inflation Path: Not ‘Merely Statistical Aberrations’
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