NVIDIA Stock Analysis: Strong Momentum Despite Overbought Conditions

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

NVIDIA Corporation's stock (NVDA) closed at $121.79 on June 10, 2024, representing a 0.75% increase from the previous trading session. The price oscillated between $117.01 and $123.10, marking noteworthy volatility. NVDA's Relative Strength Index (RSI14) stands at 83, indicating that the stock is significantly overbought and suggesting potential for a short-term pullback. Additionally, the stock trades well above both its 50-day ($94.09) and 200-day ($66.48) moving averages, evidencing strong upward momentum.

Real-time indicators, such as the Moving Average Convergence Divergence (MACD) at 9.08, also confirm strong bullish momentum. The Average True Range (ATR) at 3.90 implies heightened volatility but can be an entry or exit signal based on upcoming trends. Immediate support is established at $120.998, while resistance is identified at $122.44. NVDA's recent stock split and increased trading volume (306.22 million against an average of 481.88 million) are likely to enhance liquidity and investor interest.

Fundamental Analysis

NVIDIA's market capitalization stands at $2.97 trillion, reflecting its substantial position in the market. Despite a robust EPS of 1.7, its P/E ratio is a high 71.64, suggesting that the stock might be overvalued compared to its earnings. The recent stock split makes NVDA more accessible, potentially broadening its investor base. Analyst consensus shows overwhelming confidence, with 41 buy ratings, 3 hold ratings, and only 1 sell rating, and a target price consensus around $907.68.

The latest earnings announcement is scheduled for August 28, 2024, and genuinely favorable market sentiment could drive the stock higher. Dividend yield remains low at 0.01%, indicating that NVIDIA reinvests in growth rather than providing immediate returns through dividends.

NVIDIA Intrinsic Value and Long-Term Potential

The intrinsic value for NVIDIA can be debated amidst its high P/E ratio and lofty price targets. Analyst targets range between $131 to $1,400 implying substantial variability in possible outcomes. However, the median target of $1,120 reflects high long-term growth potential as perceived by market analysts.

NVIDIA’s robust position in AI, gaming, and data centers, along with an expanding portfolio including recent advancements, merits bullish sentiment. The recent positive sentiment around the stock split further cements its long-term value proposition despite valuation concerns.

Predictions & Outlook

Given the current technical indicators, it is likely that NVIDIA’s stock will experience a brief consolidation or slight pullback in the next trading day but is expected to continue its upward trajectory over the coming week owing to strong market sentiment and technical indicators. However, overstretched RSI suggests that caution should be exercised.

Overall Evaluation

Considering current technical and fundamental factors, NVDA can be classified as a 'Hold'. While the stock's significant overbought condition warns of a potential short-term pullback, strong fundamentals, bullish sentiment, and favorable price-target revisions bolster its long-term outlook. Long-term investors might see value in holding the stock despite near-term volatility.

Check full NVIDIA forecast and analysis here.