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Finance

NVIDIA stock ... Good buy or goodbye?

Early week NVIDIA shares were hovering at the $18 mark, but for the last week they have hovered at the $11/$12 mark thanks to problems relating to faulty GPUs. Several of you have asked whether this is a good time to buy NVIDIA stock or whether it's time to dump them and head for the hills.

Early week NVIDIA shares were hovering at the $18 mark, but for the last week they have hovered at the $11/$12 mark thanks to the news that issues plagued a significant quantity of older GPUs and the warranty burden that this puts on the company and a Q2 warning. Several of you have asked whether this is a good time to buy NVIDIA stock or whether it's time to dump them and head for the hills.

Before I go any further, a word of warning: I am not a financial planner!

OK, with that out of the way, what do I think is going to happen to NVIDIA stock over the coming weeks?

NVIDIA stock

My take is that the stock is going to hover at around the $12 a share mark until NVIDIA releases its Q2 2009 earnings Aug 12. In the interim any good news relating to the scope of the GPU issue might cause shares to climb a little, while bad news might send them lower, but if you're watching the NVDA ticker I don't think that you're going to see any significant movement until we see earnings reports, and the Q2 earnings warning is a good sign that the report when released isn't going to make pretty reading. In the short-term it's likely investors are going to be seeing red for a while.

In the long run however I think that it's safe to say that NVIDIA isn't going anywhere and that in the long-term recovery is likely, but if you're a ticker-watcher, then this is a stock you might do well to get rid of.

Disclaimer: I hold no interest in NVIDIA whatsoever.

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