14-day Premium Trial Subscription Try For FreeTry Free

NVIDIA (NVDA) Analysis: Technical Momentum but Overvaluation Concerns

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

On May 17, 2024, NVIDIA Corporation (NVDA) closed at $924.79, experiencing a decline of $18.80 (-1.99%). The stock traded between a low of $918.08 and a high of $947.40 on this day. The Relative Strength Index (RSI14) sits at 59, indicating that the stock is neither overbought nor oversold. The 50-day and 200-day moving averages are $882.46 and $609.36, respectively, showing a strong upward momentum over the medium and long term. The MACD (3-month) value of 18.23 signals a bullish trend. The Average True Range (ATR) is 3.87, suggesting moderate volatility. Key support and resistance levels are at $875.28 and $926.69, respectively.

Next Trading Day Prediction: May 20, 2024

Given the technical indicators and recent price movement, NVDA may see minor price volatility near its resistance level of $926.69. If it breaches this level, upward momentum could continue, potentially pushing the stock to approach recent highs.

Weekly Outlook: Week of May 20, 2024

With the upcoming earnings announcement on May 22, 2024, there is potential for increased volatility. Historically, earnings announcements have led to significant price movements for NVDA. The sharp interest and high volume around earnings reports may create conditions for a breakout either above the resistance at $926.69 or a dip towards the support at $875.28.

NVIDIA Fundamental Analysis

NVIDIA boasts a market capitalization of $2.31 trillion. The current P/E ratio is 77.78, raising concerns about overvaluation. The EPS stands at $11.89. Analysts provide a wide range of price targets from $133 to $1,350, though the consensus target is around $699.32, which is lower than the current price. The recent collaboration between AMD and Microsoft in cloud computing could add competitive pressure.

Intrinsic Value & Long-Term Investment Potential

The DCF computation values NVDA at $538.71, significantly lower than the current market price. This disparity suggests that NVDA might be overvalued based on intrinsic value calculation. Analysts’ consensus remains bullish with 1 strong buy, 36 buys, 4 holds, and 1 sell, indicating optimism regarding NVIDIA's long-term growth despite recent news questioning it.

Overall Evaluation

Categorizing NVDA as a 'Hold' candidate encompasses the mixed signals visible in both technical and fundamental analysis. While the stock displays robust technical momentum, supported by moving averages and MACD, its current overvaluation relative to DCF poses fundamental concerns. Investors should closely monitor the upcoming earnings for further direction, recognizing both the growth potential and inherent risks associated with a high P/E ratio and competitive pressures in the semiconductor industry.

Check full NVIDIA forecast and analysis here.