Dow Jones tech titan Microsoft stock — along with Nvidia — headline Tuesday's IBD Screen Of The Day, a column that focuses on top ideas in the IBD Stock Screener.
Tuesday's stocks to buy and watch come from the Rising Profit Estimates screen, which finds issues attracting higher price targets and analyst upgrades. Other stocks on the screen include Fair Isaac and Paccar.
Dow Jones Leader Microsoft Builds Base
Dow Jones tech titan Microsoft cut losses to 0.2% midday Tuesday, holding above its key 50-day line.
Microsoft stock is building a double-bottom base with a 340.86 buy point, according to IBD MarketSmith chart analysis. Meanwhile, aggressive investors can use Monday's high price at 336.14 as an early entry.
On July 25, the company beat expectations for its fiscal fourth quarter, thanks to continued growth in its cloud computing businesses. But the software giant offered a disappointing sales outlook and disclosed increased capital spending requirements for its artificial intelligence initiatives. In response, shares tumbled nearly 4% the next day.
Those growth prospects will again be under scrutiny with Microsoft's fiscal Q1 results due Oct. 24.
The Dow Jones software giant is expected to earn $2.65 a share on revenue of $54.5 billion, according to FactSet estimates. Those represent year-over-year increases of 13% and 9%, respectively.
Amid a rebound since late September, along with solid fundamentals, Microsoft stock boasts a strong 97 out of 99 IBD Composite Rating, according to IBD Stock Checkup.
Nvidia Stock Breaks Key Level
Nvidia dived about 5% Tuesday afternoon after the U.S. Commerce Department tightened its restrictions on the export of artificial intelligence chips and manufacturing equipment to China. Shares are falling below their 50-day moving average.
Still, they continue to form a cup base that has a 502.66 buy point. The stock appears to be forming a handle, but it is too low in the base to be considered proper.
Nvidia stock is an IBD Leaderboard stock. On Tuesday, the position was trimmed from a half size position to a quarter.
On Aug. 24, Nvidia smashed Wall Street's lofty expectations for its fiscal second quarter and guided much higher than views for the current period.
The company said it earned an adjusted $2.70 a share on sales of $13.51 billion in the quarter ended July 30. Analysts polled by FactSet had estimated Nvidia earnings of $2.08 a share on sales of $11.19 billion. On a year-over-year basis, Nvidia earnings rocketed 429% while sales soared 101%.
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Outside Dow Jones: Fair Isaac, Paccar
Also outside of the Dow Jones Industrial Average, Fair Isaac and Paccar are forming bases.
Fair Isaac rallied nearly 4% midday Tuesday, breaking out past a 916.41 buy point in a flat base. The 5% buy area goes up to 962.23.
Keep in mind the stock market uptrend is under pressure, which means investors should be playing more defense than offense.
Fair Isaac is best known for the ubiquitous FICO scores that measure consumers' credit quality. It is also a tech- and AI-driven company that develops decision-making software for a variety of industries.
The company behind Peterbilt, Kenworth and DAF big rigs — Paccar — continues to trace a flat base that has a 90.05 buy point. An early entry is possible at 87.92. Paccar shares are fighting for support around their 50-day line.
Paccar exhibited electric, connected and autonomous trucks at CES 2022. In May, Paccar also announced it is expanding its collaboration with Toyota on hydrogen fuel cell trucks.
The deal builds on Paccar and Toyota's development and commercialization of zero-emission versions of the Kenworth T680 and Peterbilt 579 models featuring Toyota's hydrogen fuel cell powertrain kit.
Be sure to follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
