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NVIDIA Corporation Fundamental and Technical Analysis: Buy Recommendation despite Overbought RSI

StockInvest.us, 1 month ago

NVIDIA Fundamental Analysis

NVIDIA Corporation (NVDA) is a major player in the technology sector, specifically in the manufacture of graphics processing units (GPUs) for gaming and professional markets, as well as system on a chip units (SoCs) for the mobile computing and automotive market. As of the last close on October 11, 2023, the company's market capitalization stood at approximately $1.16 trillion.

The company's earnings per share (EPS) rests at $1.93, which when assessed alongside a PE ratio of 242.52, indicates substantial earnings growth expectations. The consensus from market experts and analysts, according to the given data, largely tilts towards a "Buy" rating for NVDA, with 35 analysts recommending "Buy", three suggesting a "Hold" stance and a solitary analyst suggesting "Sell".

In terms of valuation, the Discounted Cash Flow (DCF) for NVDA stands at approximately $469.41, slightly above the current stock price, potentially indicating that the stock is undervalued. However, the wide range between target high ($800) and the target low price ($133) suggests a significant diversity of opinion among market analysts. The median target price is set at $290, considerably below the current stock price, suggesting possible overvaluation concerns.

The upcoming earnings announcement set for November 15, 2023, is an important event that could significantly influence the stock's performance.

Technical Analysis

NVDA recently closed at $468.06, indicating a change increase of 2.20% from its previous closing price. This performance follows a trading day range from a low of $460.50 to a high of $468.59. The stock’s 52-week range positions the year's highest and lowest traded prices at $502.66 and $108.13 respectively.

Looking at the trend indicators, NVDA’s 50-day moving average is $448.24, while its 200-day moving average is $331.23. The gap between the 50-day and 200-day moving average suggests the stock is currently experiencing a significant uptrend in the short term.

NVIDIA The RSI14 value is at 79, which is typically considered overbought. This figure might suggest a potential upcoming price correction or a slowdown in the stock's recent gains. The MACD value stands at -14.31, potentially suggesting underlying bearish trends.

NVDA’s Average True Range (ATR), which measures market volatility, is 3.02, while the stop-loss advised for this stock is approximately $450.62.

Recent News and Market Sentiment

The recent news surrounding NVDA is predominantly bullish. NVDA is cited among the top artificial-intelligence chip picks heading into earnings season by Oppenheimer. Moreover, Cowen Senior Analyst Matthew Ramsay has cast a bullish runway for NVDA, suggesting more upside potential for the stock.

Stock Price Predictions and Recommendation

Given the above insights, NVDA is projected to continue its recent trend of gains in the next trading session on October 12, 2023, likely influenced by the bullish sentiments expressed by multiple market analysts.

The current market and analyst sentiments, as well as the fundamental and technical analysis, suggest that NVDA would be categorized as a "Buy". This recommendation is predominantly influenced by the firm's positioning as a leading player in its sector, strong growth expectations, and the predominantly bullish market sentiment surrounding it.

However, potential investors should be aware of the overbought RSI value and the wide range of analyst target prices, suggesting a degree of caution is warranted. Also, as with any investment, it's essential to consider other macroeconomic factors and individual risk tolerance.

The company's upcoming earning announcement on November 15, 2023, could influence the stock's performance in the short term, potentially affecting both volatility and stock price direction. This should be kept in mind during investment decision-making.

Check full NVIDIA forecast and analysis here.