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NVIDIA Corporation NVDA Technical Analysis and Future Outlook

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

NVIDIA Corporation (NVDA) closed at $947.80 on May 20, 2024, registering a gain of 2.49%. The stock traded between $934.40 and $952.00. The current RSI (14) of 66 suggests momentum is still strong but nearing overbought territory. The 50-day moving average is $882.42, and the 200-day moving average is $611.77, showing a clear upward trend, with NVDA significantly outperforming its longer-term average.

The stock currently experiences resistance at $950.02 and finds support around $875.28. The MACD (3-month) at 23.35 supports a continued bullish trend. The ATR (Average True Range) at 3.71 points to moderate volatility. The volume of 31.56 million was below the average of 50.40 million, possibly indicating reduced trading enthusiasm ahead of the earnings announcement.

Fundamental Analysis

NVDA has a market cap of $2.37 trillion and boasts an EPS of $11.93 with a P/E ratio of 79.45, indicating strong earnings power but also a high valuation relative to earnings. The stock’s year high of $974.00 and year low of $298.06 reflect substantial growth over the past year.

The stock’s DCF valuation stands at $535.75, suggesting that NVDA is currently priced significantly above its intrinsic value. Analyst sentiment remains largely positive, with a median target price of $1,000 and a consensus rating indicating a 'Buy' outlook. There are 36 'Buy' ratings against only one 'Sell,' reflecting strong bullish sentiment among analysts.

NVIDIA Predictions and Expectations

Short-term, expectations center around the upcoming earnings announcement on May 22, 2024. There is significant market anticipation, as indicated by potential for a $200 billion swing discussed in recent press coverage. Given the current sentiment and technical indicators, NVDA's stock is likely to edge higher on the next trading day (May 21, 2024) as investors position themselves ahead of the earnings. For the upcoming week, any surprise in earnings could catalyze a substantial movement, potentially breaking the resistance level of $950.02 and heading towards the year high of $974.00.

Intrinsic Value and Long-term Investment Potential

While the intrinsic value (DCF) at $535.75 suggests that NVDA may be overvalued at its current trading price, the valuation should be considered within the context of its leading position in AI and semiconductor markets. The company's future growth potential in AI technology and expanding data center markets provides a strong long-term investment thesis. Additionally, the current economic outlook favors technology equities, further bolstering NVIDIA’s long-term prospects.

Overall Evaluation

Given the technical and fundamental analysis, NVDA can be categorized as a 'Hold' candidate. The stock exhibits strong momentum but approaches an overbought condition with significant earnings uncertainty on the horizon. Long-term growth prospects remain bright due to the company’s dominant position in emerging tech areas. However, the current valuation metrics suggest that caution is warranted, particularly for new investors seeking entry at current levels.

The upcoming earnings report is crucial; a stronger-than-expected performance could justify the high valuation and warrant re-evaluation, potentially shifting the status towards a 'Buy' if earnings significantly exceed market expectations. Conversely, any disappointing financials could expose the stock to downside risk. Therefore, current investors might consider holding to evaluate post-earnings clarity.

Check full NVIDIA forecast and analysis here.