14-day Premium Trial Subscription Try For FreeTry Free

NVDA Stock Analysis: Strong Momentum Faces Potential Short-Term Pullback

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

NVIDIA Corporation (NVDA) closed at $913.56 on May 14, 2024, up by 1.06% from the previous close. The stock traded within a range of $889.45 to $916.51, slightly below its resistance level of $919.13 and well above the support level of $875.28. With an RSI14 at 71, NVDA is approaching overbought conditions, indicating potential for a short-term pullback. The recent volume of 29.43 million is significantly lower than the average volume of 51.61 million, suggesting less trading activity and potential volatility ahead.

The Moving Average Convergence Divergence (MACD) of 0.85 suggests sustained bullish momentum. However, trading near its 50-day moving average of $878.37 but significantly above its 200-day moving average of $602.35 indicates that NVDA has been on a strong uptrend but may soon face resistance if the momentum cools down.

Fundamental Analysis

NVIDIA's current market capitalization stands at $2.28 trillion, a testament to its robust market position and investor confidence. The stock's Price-Earnings (PE) ratio of 76.45 indicates high growth expectations, possibly justifying its elevated valuation given the company's strong performance and strategic advancements, particularly in AI and supercomputing technologies.

The earnings per share (EPS) is at $11.95, and with an upcoming earnings announcement on May 22, 2024, any positive earnings surprise could further propel the stock. Noteworthy, the discounted cash flow (DCF) analysis suggests an intrinsic value of approximately $531.57, indicating that the stock may be significantly overvalued at current levels.

Recent fundamental developments, including a substantial increase in CEO Jensen Huang's compensation driven by stock performance, and Bridgewater Associates quintupling its stake in the company reflect strong institutional confidence. NVIDIA's ongoing enhancement of its supercomputing centers augments its competitive edge in the AI sector, supporting its long-term growth narrative.

NVIDIA Predictions

For the next trading day (May 15, 2024), NVDA may face near-term resistance around $919.13, with a potential minor correction considering the overbought RSI level. However, the overall uptrend suggests that any pullback might be limited to the support area around $875.28.

Looking ahead to the upcoming week, investor sentiment will likely hinge on broader market movements and sector performance, coupled with anticipation for the earnings report. NVDA may continue to fluctuate within the $875.28 - $919.13 range unless substantial news or earnings surprises shift the dynamics.

Intrinsic Value and Long-Term Potential

Although the DCF analysis estimates an intrinsic value of approximately $531.57, considerably lower than the current trading price, NVIDIA's leadership in AI and continued innovation bolster its long-term investment appeal. Its dominant market position, strategic technological advancements, and substantial institutional backing suggest sustained growth potential, albeit at a high valuation.

Overall Evaluation

Categorized as a Hold candidate, NVDA presents a complex mix of short-term technical indicators nearing overbought conditions and a high yet not fully supported current valuation based on DCF. Long-term prospects remain robust due to strategic positioning in transformative technologies. Investors might consider maintaining their positions, monitoring upcoming earnings for directional cues.

Check full NVIDIA forecast and analysis here.