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NVIDIA Corporation Shows Modest Growth in Technical Analysis, Holding Potential for Long-term Investors, 3 weeks ago

NVIDIA Technical Analysis

NVIDIA Corporation (NVDA) ended the trading day on April 29, 2024, at $877.57, showing a nominal increment of 0.03% from the prior close. The stock exhibited a daily range between $852.66 and $879.92. Key technical indicators provide a mixed sentiment: The Relative Strength Index (RSI) at 53 suggests a modest bullish momentum is still present, neither overbought nor oversold.

The Moving Average Convergence Divergence (MACD) stands at -27.23, indicating a bearish signal which conflicts with the currently positive price movement. However, given the stock's trading above both the 50-day moving average of $850.86 and significantly above the 200-day moving average of $578.85, the longer-term trend appears robustly bullish.

NVDA's Average True Range (ATR) is 4.66, reflective of moderate volatility. With immediate support and resistance levels at $875.28 and $884.55 respectively, the stock might experience slight fluctuations within this range in the short term.

Fundamental Analysis

NVIDIA's market capitalization stands sturdily at approximately $2.19 trillion. The stock's trailing Price to Earnings (P/E) ratio is 73.56, higher than the industry average, indicating investors may expect higher future earnings growth, albeit at a premium. The company's earnings per share (EPS) is $11.93, supporting the high valuation to some extent.

The upcoming earnings announcement on May 22, 2024, might be a critical event given recent optimistic analyst upgrades and a steady focus on AI-driven growth in big tech. Analyst consensus predominantly rates NVDA as a 'Buy' with a consensus target price around $660.68, significantly below the current level, suggesting that the stock might be overvalued compared to analyst expectations.

NVIDIA Recent news underscores NVIDIA’s vital role in the AI sector, driving investor sentiment further. This focus on AI, especially with sector-wide attention on AI following strong earnings from other tech giants, supports potential future profitability.

Intrinsic Value and Long-term Investment Potentials

The discounted cash flow (DCF) value estimated at $520.72 suggests that NVDA might be overvalued based on its future cash flows. This discrepancy calls for careful consideration for long-term investors, weighing the growth potential against the premium currently paid for NVIDIA shares.

Despite this, NVIDIA’s foundational role in the burgeoning AI industry, combined with consistent analyst confidence and its strategic positioning in the tech sector, presents strong long-term investment potentials if the company continues to innovate and expand profitably.

Overall Evaluation and Stock Category

In light of the aforementioned analysis, NVDA appears as a 'Hold' category for investors currently holding the stock, due to its strong market position and potential for long-term gains. However, given the high P/E ratio and the current stock price significantly above the consensus target, potential buyers should be cautious about entering at a high price level.

For the next trading day, anticipate NVDA to likely remain stable with possible fluctuations within the identified support and resistance levels. Over the upcoming week, barring unforeseen sector-wide shifts, the stock might closely adhere to broader market movements, especially influenced by tech sector sentiments and AI-specific developments.

Check full NVIDIA forecast and analysis here.