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NVDA Technical and Fundamental Analysis: What to Expect Post Earnings

StockInvest.us, 1 month ago

NVIDIA Technical Analysis of NVIDIA Corporation (NVDA)

As of April 09, 2024, NVIDIA Corporation's (NVDA) stock closed at $853.54, marking a decline of 2.04% from its previous close. The day's trading range was between $830.22 and $876.35, indicating a level of volatility that traders might find enticing. The Relative Strength Index (RSI) standing at 40 suggests that NVDA is neither overly bought nor sold, occupying a neutral territory that could sway either direction based on upcoming market sentiments.

During this period, NVDA's price is substantially above both the 50 Day Moving Average (DMA) of $803.50 and the 200 DMA of $549.26, reflecting a strong bullish trend over the medium to long term. However, the Moving Average Convergence Divergence (MACD) at 25.69, while positive, indicates that the stock may be nearing a potentially overextended phase in its current trajectory.

Support and resistance levels are set at $788.17 and $857.74 respectively, highlighting critical points that could either bolster the stock's upward momentum or signify a trend reversal if either boundary is breached. The Average True Range (ATR) stands at approximately 4.10, signifying a moderate level of intra-day volatility.

Fundamental Analysis of NVIDIA Corporation (NVDA)

NVIDIA, with a market capitalization of $2.13 trillion, stands as one of the most valuable tech companies globally. The latest EPS figure is $11.94, combined with a P/E ratio of 71.49, pointing towards investors' high expectations for future growth, particularly in AI and gaming sectors. NVDA's recent movements in the stock price, despite significant volatility, have been influenced by several key factors discussed in recent news articles highlighting the company's position in artificial intelligence and competition within the semiconductor space.

The backdrop of this fundamental outlook is framed by NVIDIA’s pivotal role in AI developments, as noted by industry experts and analysts who see NVIDIA as retaining its crown in the semiconductor and AI industry despite emerging competitors and technologies.

NVIDIA Analyst Sentiments and Intrinsic Value Considerations

Analysts have shown a strong inclination towards Nvidia, with a consensus of "Buy" based on 37 buys, 3 holds, and 1 sell. The target prices for NVDA range widely from a high of $1200 to a low of $133, with a median target of $650, which is notably below the current trading price, suggesting that while growth is expected, there might be concerns regarding the stock's valuation.

The Discounted Cash Flow (DCF) valuation of $538.54, substantially below the current market price, raises questions about the potential overvaluation of NVDA stocks based on future cash flow expectations alone.

Prediction and Stock Performance Outlook

Considering the technical and fundamental analyses, and given the strong underlying business, NVDA may experience slight fluctuations in the short term, especially leading up to the next trading day and week following the earnings announcement on May 22, 2024. The stock's current position above crucial moving averages indicates sustained investor confidence, but the relatively high P/E ratio and DCF valuation suggest caution.

Overall Evaluation

Based on the analysis, NVIDIA Corporation (NVDA) would be categorized as a 'Hold' for most portfolios. The decision stems from the consideration of its impressive growth trajectory, significant contributions to and dominance in the AI and gaming sectors, alongside the concerns over its current valuation levels in relation to intrinsic value estimates.

Investors might want to wait for a clearer signal of either a price correction or additional strong financial performance indicators before making further commitments. In particular, keeping an eye on the upcoming earnings announcement could provide crucial insights into the company's ability to sustain its growth and justify its current valuation. Despite the high valuation, NVDA’s pivotal role in future technology advancements keeps its long-term investment potential bright, albeit with a conservative approach in the short term.

Check full NVIDIA forecast and analysis here.