Semis, Nvidia Set for Big Moves as GTC Conference Kicks Off

Key Points

• Nvidia CEO Jensen Huang is poised to take the stage at the Company's GTC conference, which is renowned for unveiling groundbreaking advancements.
• Despite a recent sector pullback, the conference could offer major sector and technological developments, with Nvidia driving AI and computing innovation.
• NVDA has surged 77% year-to-date, while the semiconductor sector ETF SMH has gained nearly 25%, showcasing robust performance in the sector.

Nvidia NASDAQ: NVDA is not just on a hot streak; it's setting records. With shares skyrocketing 241% over the past year and a staggering 77% year-to-date, the company has become an indispensable force in the tech world. Its CEO, Jensen Huang, is a sought-after figure, and companies worldwide seek its graphics cards like rare treasures.

The anticipation is palpable as Huang prepares to take the stage at Nvidia's annual GTC conference in San Jose, California. This event has historically been a platform for groundbreaking announcements, and this year seems poised to be no different.

In 2022, Nvidia unveiled its Hopper graphics architecture and H100 graphics processing unit, which quickly became the go-to choice for AI model training and deployment. Now, all eyes are on the expected debut of their successors, codenamed Blackwell Architecture and B100 card. These are rumored to offer even greater performance, especially for running advanced models like OpenAI's GPT-3.

But hardware is not the only thing grabbing attention. Nvidia is also expected to showcase the latest advancements in its CUDA software, adding another layer of excitement to the conference. With over 300 exhibitors and esteemed speakers from industry giants like OpenAI, Meta, and Microsoft, the GTC conference promises to be a melting pot of innovation and expertise.

However, amidst this frenzy, the semiconductor sector has seen a slight pullback, raising questions about the timing of potential investments. As the popular semiconductor ETF VanEck Semiconductor NASDAQ: SMH, which includes Nvidia among its top holdings, retraces from its recent highs, investors wonder if now is the right moment to capitalize on the sector's resilience.

In this dynamic landscape, Nvidia is set to once again redefine the future of AI and computing. The GTC conference could unveil groundbreaking technologies and provide valuable insights into the trajectory of the broader semiconductor market.

So, as the conference kicks off, could now be the opportune time to buy the sector's recent pullback and its top holding, Nvidia, for a leg higher?

Semiconductor ETF is 9% off its Recent Highs

The VanEck Semiconductor ETF NASDAQ: SMH is a market-cap-weighted index of 25 of the largest US-listed semiconductor companies. NVDA, TSM, and AVGO are among its top three holdings. 

The ETF surged almost 75% over the previous year and is close to 25% higher year-to-date. More recently, however, after going vertical and achieving new highs, the sector ETF has pulled back close to 9% between a converging 5-day and 20-day SMA. As the sector-wide catalyst, the GTC conference kicks off, now might be the opportune time to re-enter the sector ETF following its recent pullback.

Should SMH reclaim its declining 5-day SMA, near $221, a short-term break of its downtrend would be confirmed, indicating a start of a new uptrend and leg higher. It will also be vital to keep tabs on its top three holdings, mentioned above, as any significant directional moves in either of them could heavily influence the overall direction and sentiment of the sector ETF.

Nvidia Coils Ahead of its Conference

Following its impressive start to the year, where shares of the semiconductor giant surged to new heights, the stock has retraced almost 10% from its all-time highs. Over the previous week, shares of NVDA were essentially unchanged as the stock consolidated near its flattening 5-day SMA in a tight range. 

Last week’s action resulted in an intriguing setup and opportunity ahead of its major event. With the stock extremely coiled, it looks set to make a major directional move as the GTC Conference kicks off. Investors and traders will closely watch two potential inflection points in the stock. $900 acts as resistance for an upside breakout. For a potential sell-the-news event, which seems unlikely given the hype and importance of the event, $860 is a significant area of support.