14-day Premium Trial Subscription Try For FreeTry Free

NVIDIA Stock Analysis: Bullish Momentum Continues Amid Overbought Conditions

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

NVIDIA Corporation (NASDAQ: NVDA) closed at $953.86 on May 21, 2024, marking a 0.64% increase with a trading volume of 32.22 million shares, significantly below the average volume of 49.82 million. The stock's RSI14 sits at an elevated 76, indicating overbought conditions. The MACD (3-month) of 27.70 supports a strong bullish trend.

The stock's price range for the day spanned from $931.80 to $954, close to its year high of $974. Technical indicators suggest strong resistance has yet to be formed, with immediate support at $875.28 and a stop-loss pegged at $920.67. The stock is well above the 50-Day ($883.87) and 200-Day ($614.29) moving averages, indicative of sustained upward momentum.

Fundamental Analysis

With a market capitalization of $2.38 trillion, NVIDIA is a dominant player in the semiconductor industry. The stock's PE ratio stands at a high 79.89, reflecting substantial growth expectations, underpinned by its EPS of $11.94. Anticipation runs high for the upcoming earnings announcement on May 22, 2024, which investors expect could trigger significant market movements.

The firm’s Discounted Cash Flow (DCF) valuation of $534.31 suggests the current market price is substantially overvalued. Analyst sentiment is predominantly positive, with a consensus target median price of $1,000 and a strong bias towards 'buy' ratings (37 'buy' and 1 'strong buy' against 4 'hold' and 1 'sell').

Market and News Insights

NVIDIA Recent reports underscore NVIDIA's critical role in driving S&P 500 earnings growth and the broader equity market. The company's innovative edge, often described as its "secret sauce," and its impressive track record in surpassing earnings expectations, further bolster investor confidence. Options market analysts are expecting a notable move post-earnings, reflecting high trader interest and anticipated volatility.

Stock Performance Predictions

Next Trading Day (May 22, 2024): Given the strong bullish sentiment, overbought RSI, and the forthcoming earnings announcement, NVDA could experience higher volatility with potential short-term fluctuations. The impending earnings report is likely to be the primary catalyst, with a substantial move in either direction based on results and guidance.

Upcoming Week: Assuming positive earnings results, NVDA might challenge and potentially surpass its year high of $974. Conversely, any below-par performance or guidance could prompt a pullback towards the $875.28 support level.

Intrinsic Value and Long-Term Investment Potential

NVIDIA's intrinsic value, as indicated by the DCF model at $534.31, suggests the stock is considerably overvalued at its current trading levels. However, given its technological leadership, robust market position, and consistent performance, the company presents considerable long-term growth potential, despite the current overvaluation.

Overall Evaluation

Based on comprehensive technical and fundamental analysis, and considering the stock's current price relative to its intrinsic value, NVIDIA Corporation is categorized as a 'Hold.' While high expectations and robust growth prospects justify holding the stock, the elevated valuation deters labeling it as a 'Buy' at present levels. Investors may consider re-evaluating post-earnings for any fundamental shifts.

Check full NVIDIA forecast and analysis here.