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NVIDIA Corporation (NVDA) closed the last trading session on December 13, 2023, at $480.88, with technical analysis and fundamental analysis suggesting a Buy recommendation due to positive momentum, strong profitability, analyst confidence, and potential macroeconomic shifts in the technology sector.
Technical Analysis
NVIDIA Corporation (NVDA) closed the last trading session on December 13, 2023, at $480.88, showing a marginal increase of 0.90% or $4.31 from the previous trading day, with the day's range between $476.12 and $485.94. Despite the positive move, the current price is trailing the year high of $505.48 and substantially elevated from the year low of $138.84.
The technical indicators present a mixed sentiment. The Relative Strength Index (RSI14) at 47 indicates that NVDA is neither overbought nor oversold. The stock's 50-day moving average at $457.22 suggests a bullish trend in the short term as it's above the 200-day moving average at $390.63, reflecting positive price momentum over the intermediate-to-long term.
The culmination of Moving Average Convergence Divergence (MACD) at 3.37 also indicates bullish momentum in the recent term. However, the stock is approaching its immediate resistance level at $487.16, and it may require significant buying pressure to push beyond this barrier.
Considering the Average True Range (ATR) of about $2.88, NVDA shows moderate volatility, and with a stop-loss advised at $459.93, there is an implication of a cautiously optimistic short-term outlook. The volume on December 13 was 43.35 million, almost at par with its average volume of 43.75 million, suggesting standard trading activity without significant accumulation or distribution.
Fundamental Analysis
NVIDIA is trading at a PE ratio of 63.44, indicating a rather high valuation relative to earnings, which could signal optimism about future growth prospects or possibly overvaluation compared to industry peers. An EPS of $7.58 underpins the company's profitability.
With a substantial market capitalization of approximately $1.19 trillion, NVDA holds a robust position in the market with a large-scale operational presence. NVIDIA's upcoming earnings announcement on February 21, 2024, will be a crucial event for investors to reassess the company's fundamental performance.
The consensus among analysts is "Buy," with 35 out of 39 total ratings being "Buy" and a median target price of $362.50. This reflects a strong confidence in the stock's potential upside, despite the current price ($480.88) being above this consensus median target.
Interest and bullish sentiments from notable investors such as Paul Meeks, who deemed NVDA as "undervalued," and Cathie Wood's broader sectoral strategy shifting towards technology stocks as interest rates are anticipated to retreat in 2024, could result in increased investor confidence and influence the stock price positively.
Short-Term Outlook
For the next trading day, NVDA's performance will likely depend on the market's reaction to the technical resistance level and recent bullish news. If the stock can maintain its above-average volume and break through the resistance at $487.16, it may continue its upward movement. Conversely, if the stock faces selling pressure and falls below its stop-loss level, it could signify a short-term pullback.
For the week ahead, investors will monitor the broader market sentiment towards the technology sector and its influence on NVDA. The current bullish technical setup may support a positive performance, but resistance levels need to be watched closely.
Overall Evaluation
The assessment leads to a "Buy" recommendation for NVIDIA Corporation. The robust technical momentum, consistent with fundamental indicators of profitability and analysts' buy consensus, overweighs the stock's relatively high valuation. Additionally, positive sentiments from market influencers and the projection of an upcoming favorable macroeconomic shift within the technology sector enhance NVDA's appeal to investors.
While the stock may not be without short-term volatility, the overarching trend and investor sentiment suggest an overall positive outlook for NVIDIA Corporation, reinforced by its strategic positioning in the expanding AI and tech innovation markets. Long-term investors, in particular, may find NVDA as a desirable addition to their portfolios, given its market dominance and growth potential.
