Nvidia (NVDA) Shows Strong Technical Strength and Continued Bullishness

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

As of April 10, 2024, Nvidia Corporation (NVDA) closed the trading day at $870.39, showcasing a notable increase of 1.97% from its previous close. The stock has been trading between a low of $837.09 and a high of $874.00 during the day. Over the past year, NVDA has oscillated between a low of $262.2 and a high of $974, indicating a volatile yet strongly upward trajectory. The stock's market capitalization has reached an impressive $2.18 trillion, with a trading volume of 42.86 million shares, slightly below its average volume of 53.09 million shares.

The Relative Strength Index (RSI14) at 42 suggests that the stock is neither overbought nor oversold, pointing towards a neutral market sentiment currently. The 50-day moving average sits at $808.36, while the 200-day moving average is at $551.38, both below the current stock price, indicating a bullish trend. The Moving Average Convergence Divergence (MACD) is positive at 20.18, reinforcing the ongoing upward momentum. The Average True Range (ATR) of 4.03 reflects moderate volatility.

Given these technical indicators, NVDA is showing signs of continued bullishness in the short term. The immediate resistance level at $875.28 could be tested in the next trading session, with support at $788.17 providing a solid downside buffer.

Fundamental Analysis

Nvidia's current price-to-earnings (PE) ratio stands at 72.84, a premium that reflects the market's high expectations for future growth, primarily driven by its dominant position in the AI and semiconductor industries. The company's earnings per share (EPS) of $11.95 corroborate its robust financial health. Considering the anticipation around Nvidia's earnings announcement on May 22, 2024, investors seem optimistic about future earnings potential.

The recent news underscores Nvidia's pivotal role in the AI market, a segment witnessing exponential growth. The company's strategy of market creation, rather than competition, positions it uniquely for sustained leadership and innovation. This strategic approach, coupled with the burgeoning demand for AI technology and data center buildouts, provides a fertile ground for Nvidia's long-term growth and market expansion.

NVIDIA Intrinsic Value and Long-Term Investment Potential

The discounted cash flow (DCF) analysis indicates an intrinsic value of $542.87, substantially below the current trading price, suggesting that NVDA might be overvalued at present. However, given Nvidia's aggressive expansion into AI and strong market positioning, investors may be willing to pay a premium for growth prospects. It's notable that analysts have a high target consensus of $637.43, with a more optimistic outlook placing the target at $1,200, signaling significant confidence in Nvidia's growth trajectory over the long term.

Prediction and Evaluation

For the next trading day, April 11, 2024, NVDA is likely to experience continued bullishness, potentially testing the resistance level of $875.28. Over the upcoming week, the stock may see progressive gains, supported by its technical strength and positive market sentiment surrounding its fundamentals.

However, given the current PE ratio and the divergence from the DCF valuation, investors should be cautious. The stock appears overvalued, which might limit its short-term gains despite the bullish trends.

Overall Evaluation

NVDA is categorized as a Hold candidate. While the company's fundamentals are solid with promising long-term growth prospects in AI and semiconductors, the current stock price seems to have factored in much of this optimism, as indicated by its high PE ratio and departure from intrinsic valuation. Investors should monitor the stock for any price adjustments post-earnings announcement or significant market changes, potentially providing a more favorable entry point. This evaluation balances Nvidia's undeniable market potential and current valuation metrics, suggesting a cautious approach while acknowledging the company's strategic market position and future growth avenues.

Check full NVIDIA forecast and analysis here.