Sign InNVIDIA Corporation: Potential Volatility Ahead but Analysts Recommend 'Buy'
Summary
As of August 22, 2023, NVIDIA Corporation's stock price showed signs of potential recovery and growth, with an overall uptrend, positive EPS, and expert consensus of Buy, despite potential volatility due to a recent loss and pending earnings report.
Company Overview
NVIDIA Corporation (NASDAQ: NVDA) is a global technology company. As of the last close on August 22, 2023, it had a market capitalization of $1.13 trillion. With 2.47 billion shares outstanding, the closing price of NVDA was $456.68, marking a decline of 2.77%. Throughout the day, the stock fluctuated between a high of $481.74 and a low of $453.33.
Technical Analysis
The Relative Strength Index (RSI14) of NVDA is at 55, indicating that the stock is neither overbought nor oversold. However, the Moving Average Convergence Divergence (MACD), a trend-following momentum indicator, has a reading of -7.46 in the 3-month metric, signifying a possible bearish trend. Nonetheless, the stock is above its 50-day moving average at $436.47 and significantly above the 200-day moving average at $280.23, suggesting a long-term bullish trend.
The Average True Range (ATR), that measures market volatility, is at 4.12. This suggests that traders and investors should be prepared for a certain degree of price volatility. The stock has support at $401.11 and faces resistance at $464.61.
Fundamental Analysis
NVDA currently trades at a high PE ratio of 236.62, which may suggest overvaluation. However, the firm's EPS is on the positive side at $1.93. Furthermore, the discounted cash flow (DCF) valuation of NVDA is $458.03.
According to projections, the high and low estimates for NVDA are $800 and $133 respectively, with a target consensus at $303.91, and the target median at $250. Consequently, the expectations from the market experts are quite spread, which is indicative of uncertainty.
As for the Expert Recommendations, majority recommend "Buy" with 36 experts favoring this action. Meanwhile, only one expert recommends a strong buy, three recommend a hold, one recommends a sell, and none indicate a strong sell. The overall consensus, therefore, is a "Buy".
Recent News and Earnings Announcement
Relevant recent news for NVIDIA focuses on its expansion of partnership with VMware on generative AI. Furthermore, Fernando Vidal commented that Nvidia is overvalued. Meanwhile, Adam Crisafulli indicated that Nvidia dominates its market and the demand is incredibly high. Lastly, there is anticipation for NVDA's earnings report, which is scheduled to be released on August 23, 2023.
Prediction and Recommendation
Given the recent loss, increased trading volume, and pending earnings report, there may be potential volatility for the NVDA stock in the coming trading day and the upcoming week. However, considering the overall uptrend, analyst consensus for a "Buy", positive EPS, and most recent news, the stock shows signs of potential recovery and growth.
Accordingly, the stock price could fluctuate within its support and resistance levels for the next trading day, before definitive direction is observed in line with the earnings announcement. Moreover, the trading price for the upcoming week is expected to be impacted by the earnings report and could move towards the DCF value of $458.03.
In the long-term context, given the positive overall trend and the promising EPS, not forgetting the green flag from expert consensus, NVDA can be considered as a "Buy". Yet, it is important to remain mindful of the high PE ratio suggesting overvaluation, and the divergent target prices from market experts visible in the stock analysis. Investors are advised to weigh these factors when considering NVDA.
