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NVIDIA Stock Shows Resilience with Slight Gain, Holds 'Hold' Recommendation

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

NVIDIA Corporation (NASDAQ: NVDA) exhibited resilience in the most recent trading day, closing at $479.98, representing a modest gain of 0.90%, even as markets faced a broader dip. The stock's recent performance has shown a slightly bullish trend, closing above the 50 Day Moving Average of $469.30 but still under its resistance level at $487.16. The closing price rested near the higher part of the day's range, with a high of $485.00. The momentum indicator RSI (Relative Strength Index) stands neutrally at 49, suggesting neither overbought nor oversold conditions.

The volume of shares traded at 30.43 million was below the 3-month average volume level of 42.19 million. This could indicate that the recent uptick in price wasn't backed by significant volume, and could thus lack strong conviction among buyers. Additionally, the stock's 3-month Moving Average Convergence Divergence (MACD) is positive at 6.61, indicating a bullish trend could persist in the short term.

Fundamental Analysis

NVIDIA's impressive year-on-year performance, with the stock price surging by over 230% since the beginning of 2023, can be ascribed to the company's strong position in the AI expansion sector and synergistic investments like the recent funding for Perplexity AI, alongside heavyweight investor Jeff Bezos. NVIDIA's market capitalization sits at a substantial $1.19 trillion, reflecting the scale and investor confidence in the company. Its Earnings per Share (EPS) of $7.57 and high Price to Earnings (PE) ratio of 63.41 imply expectations of continued growth, but also highlight its premium valuation in the market.

The upcoming earnings announcement on February 21, 2024, holds potential for significant movement in NVDA's stock price. However, the company's high valuation is a factor to watch since it may amplify reactions to any earnings surprises or disappointments.

NVIDIA Stock Performance Predictions

For the next trading day, January 5, 2024, considering the technical indicators and recent market sentiment reflected in the news, the stock is poised for slight positive momentum. However, the performance will hinge on market conditions and investor sentiment, keeping in mind the mixed volume data.

Over the upcoming week, the stock may continue to test the resistance at $487.16. If it breaks through with strong volume, it could move closer to the year's high. However, if resistance holds, it may continue trading within the band established by recent lows and highs.

Overall Evaluation

Upon evaluating NVIDIA's stock, combining both technical and fundamental perspectives, the recommendation is a 'Hold.' While the strong growth trajectory and robust market position are quite favorable, the high valuation metrics introduce the risk of volatility, especially approaching the earnings announcement. Investors should consider holding to see if the upcoming earnings and future guidance solidify the company's growth outlook, which may justify the premium valuation, or if market sentiment leads to a significant price correction.

New investors might want to wait for a potential retraction or for the earnings report before committing, while existing shareholders could benefit from holding to capitalize on the forecasted growth in AI and semiconductor sectors that NVIDIA is strategically positioned in. A 'Buy' rating might be more suitable post-earnings if the company demonstrates stronger fundamentals, especially if coupled with positive forward guidance that exceeds market expectations. Conversely, a 'Sell' signal would be triggered if the stock price breaches support levels with high volumes, indicating a potential trend reversal.

Check full NVIDIA forecast and analysis here.