NVIDIA Corporation: Technical and Fundamental Analysis Points to 'Hold' Rating

StockInvest.us, 1 week ago

NVIDIA Technical Analysis

NVIDIA Corporation (NVDA) closed at $125.83 on July 05, 2024, experiencing a decline of 1.91% from the previous trading day. The stock has shown volatility with an intraday low of $125.68 and a high of $128.85. The Relative Strength Index (RSI14) stands at 46, suggesting the stock is neither overbought nor oversold. The 50-day and 200-day moving averages are $107.32 and $72.56, respectively, indicating an uptrend over both short and long terms.

The stock's Average True Range (ATR) of 4.26 indicates moderate volatility, while the MACD value of 6.997352 reflects bullish momentum over the past three months. Support and resistance levels are identified at $121.00 and $126.09, respectively, with a stop-loss set at $119.44. Given the current price is close to the resistance level, any breakout could lead to further bullish momentum.

Fundamental Analysis

NVIDIA has a significant market capitalization of $3.10 trillion, highlighting its strong position in the semiconductor industry. The company's earnings per share (EPS) stands at $1.71 with a price-to-earnings (PE) ratio of 73.58, suggesting the stock is trading at a high multiple. The significant deviation between the Discounted Cash Flow (DCF) valuation of $56.81 and the current price indicates the stock may be overvalued.

Analysts have varied price targets for NVDA, with a high of $220 and a low of $13.3. The consensus target price is $100.62, and the median is $118. Most analysts rate the stock as a 'Buy', albeit with some recent downgrades that may affect sentiment.

Presently, the market volume was 211.48 million shares, lower than the average volume of 422.84 million shares, suggesting reduced trading interest.

NVIDIA Next Trading Day (July 08, 2024) Outlook

Given NVIDIA's close proximity to its resistance level of $126.09 and the recent downgrades, it is likely the stock might experience cautious trading. Expect some consolidation around the $125-$126 mark unless there is a significant catalyst to drive the price movement.

Upcoming Week Forecast

Over the coming week, NVIDIA could face minor downward pressure, potentially testing the support at $121. Despite bullish indicators, the recent downgrades and the stock’s overvaluation relative to its DCF could temper gains. However, strong investor interest in the AI industry may provide some upward support.

Intrinsic Value and Long-term Investment Potential

NVIDIA’s intrinsic value, based on DCF, is considerably lower than the current price, indicating potential overvaluation. Long-term prospects remain strong due to the growing demand in AI, data centers, and GPU technologies. Nonetheless, the current high valuation poses risks, especially if growth expectations are not met.

Overall Evaluation

Given the recent downgrades, high valuation metrics, and technical indications, NVIDIA is categorized as a 'Hold' candidate. While long-term fundamentals are compelling, short-term risks and potential overvaluation at current levels warrant a more cautious stance until further clarity on growth and valuation alignment is achieved.

Check full NVIDIA forecast and analysis here.