Sign InSummary
As of September 8, 2023, NVIDIA Corporation (NVDA) has a high market cap of $1.13 trillion and operates in the technology sector with a focus on computer software and hardware design, particularly artificial intelligence; analysts recommend buying the stock despite a high P/E ratio, while recent news highlights concerns about potential overvaluation, but partnerships in India suggest international growth potential.
Company Overview
The subject of this analysis is NVIDIA Corporation, ticker NVDA on the NASDAQ exchange. NVIDIA Corporation, with a market cap of $1.13 trillion, operates in the technology sector, specializing in computer software and hardware design, with a heavy emphasis on artificial intelligence functionality.
Fundamental Analysis
The most recent closing price for NVDA was $455.72 on September 8, 2023, marking a -1.45% decrease, or -$6.69. This places it in the upper spectrum of its yearly trading range, which spans from $108.13 to $502.66.
The company's present Price-to-Earnings ratio is a substantial 236.12, indicative of a high market expectation for its future profit growth. NVDA's earnings per share (EPS) is currently $1.93.
It is worth noting that NVDA's discounted cash flow (DCF) is $457.07, which is slightly higher than its recent closing price, suggesting nvda is somewhat undervalued.
As to Wall Street's consensus, it leans towards a "Buy" verdict, with 36 analysts recommending "Buy", 2 recommending "Hold", and one recommending "Sell".
Recent News and Partnerships
Recent news about NVDA shows mixed sentiment. Some consider NVDA may be overvalued given its high market valuations, raising concerns based on the example of Cisco Systems Inc. stock in March 2000 where investors still haven't recouped their investments even after 23 years.
However, other reports suggest that semiconductor stocks, which NVDA is among, could be attractive buys considering rising EPS estimates and their present valuation. Moreover, NVDA recently announced partnerships in India to provide AI services, which has potential to boost their international presence and increase their market share.
Technical Analysis
NVDA's daily trading volume was 44.17 million, relative to an average trading volume of 51.25 million. This suggests a lower than average trading interest for the most recent trading day. The stock’s 50-day moving average is $450.14, showcasing an upward trend, while the 200-day moving average is lower at $299.75, confirming the positive momentum over a more extended period.
The stock’s Relative Strength Index (RSI) value is 58, suggesting it is neither overbought nor oversold.
NVDA's Moving Average Convergence Divergence (MACD) for the 3-month period is 12.43, implying a positive outlook, as the MACD is above the signal line. The stock also shows to have some volatility with an Average True Range (ATR) of 4.01 which investors may want to account for.
The immediate support and resistance levels are $454.69 and $456.68, respectively.
Outlook and Recommendations
Based on the analysis, the outlook for NVDA seems positive. The company's substantial market cap, together with strong buy recommendations from analysts despite the high P/E ratio, indicate robust confidence in its future growth.
Taking the technical indicators into consideration, the upward trend confirmed by the 50-day and 200-day moving averages, coupled with a positive MACD, suggests that the upward trend may likely continue, although investors should monitor the stock for changes in volatility indicated by the ATR.
As a result, one might predict the stock price to rise somewhat in the next trading session on September 11, 2023, potentially moving closer to its immediate resistance level of $456.68. Looking into the upcoming week, there could be further upward movement, but investors should remain cautious due to potential volatility.
Combining the obtained insights from technical, fundamental analysis and recent news, the general recommendation would lean towards “Buy”. However, investors should be cautious considering the high P/E ratio and potential overvaluation concerns raised in recent news.
