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NVIDIA Stock Faces Near-Term Turbulence but Holds Long-Term Promise

StockInvest.us, 2 months ago

NVIDIA Fundamental Analysis

NVIDIA Corporation (ticker: NVDA) is a leading force in the technology sector, primarily known for its graphics processing units (GPUs) and artificial intelligence (AI) applications. On September 28, 2023, the stock closed at $430.89, marking a slight upward movement by 1.46% ($6.21).

Over the past year, the stock has experienced a significant range of price volatility, trading as low as $108.13 and reaching a zenith at $502.66. As of the last close, the company commands a massive market capitalization of $1.06 trillion, reflecting its dominant position within the industry.

The annual earnings per share (EPS) is $1.93, giving a Price-to-Earnings (PE) ratio of 223.26. While on the higher end, a high P/E ratio can be justified for a growth-oriented company like NVIDIA, and potentially suggests that investors are willing to pay a premium for future earnings growth.

However, the company's trailing PE is significantly higher than the target median price of $265 as suggested by analysts, suggesting that the stock might be currently overvalued. Nonetheless, the analyst consensus predominantly advocates to 'buy' (36 out of 39), with two holding and one recommending 'sell'.

The discounted cash flow (DCF) analysis renders a value of $432.24 per share, which is in line with the current trading price. Depending on trading preferences, investors might see this as an equilibrium point or a signal of minor undervaluation.

Importantly, recent news about an antitrust raid in Nvidia's French offices has surfaced, which could potentially pose regulatory risks and consequent market instability for the company.

NVIDIA Technical Analysis

On a technical front, NVDA is currently trading below its 50-day moving average ($450.55), hinting a short-term bearish trend. On the contrary, it stays well above its 200-day moving average ($318.83), implying a longer-term bullish trend. The RSI14, a momentum indicator, sits at 36, which suggests that the stock isn't overbought or oversold.

The company's Moving Average Convergence Divergence (MACD) line over the past three months stands at -12.80, indicating a bearish sentiment in the recent past. The stock also has a moderate average true range (ATR) of 3.51, indicating relative volatility.

Considering its last closing price ($430.89), the stock has a proximate support and resistance at $425.54 and $454.69 respectively.

Conclusion and Prediction

Given the above analysis, it is challenging to provide an exact prediction for the next trading day or the upcoming week due to the numerous variables at play. However, considering the amalgamation of fundamental and technical factors along with the current market standing, one can expect some short-term turbulence in the stock price given the news about the antitrust concerns.

For the longer term, considering the strong 'buy' recommendation from the majority of the analysts, NVIDIA's prominent position in the tech industry and promising push into AI technologies, the stock may have the potential for valuable returns.

Therefore, the final evaluation for NVIDIA is: Hold for short-term investors due to possible short-term instability, but Buy for long-term investors banking on the continuous growth of NVIDIA and the sectors it operates within. Please make sure to consider your risk tolerance and financial situation before making any decisions.

Check full NVIDIA forecast and analysis here.