NVIDIA Stock Shows Upward Potential Amid Strong Demand for AI Chips and Analyst Support

StockInvest.us, 1 month ago

NVIDIA Technical Analysis

NVIDIA Corporation (NVDA) closed at $118.85 on October 2, 2024, with a modest gain of 1.58%. The stock has displayed consistent volatility, with an average true range (ATR) of 4.46, indicating potential for significant price movement. Close to the 50-day moving average of $115.79, NVDA is positioned for a possible upside if momentum carries forward. The current RSI of 50 suggests a neutral sentiment among traders, with no strong overbought or oversold conditions.

The support level at $109.21 remains critical for maintaining upward momentum, while resistance looms at $123.74. Given yesterday's price performance, NVDA may test resistance levels in the next trading session.

Fundamental Analysis

NVIDIA's market capitalization stands at approximately $2.92 trillion, underlining its status as one of the most valuable companies. The price-to-earnings (P/E) ratio of 55.54 indicates that investors are paying a premium for future earnings, reflective of strong growth expectations, particularly in the burgeoning AI sector. The recent expressions from CEO Jensen Huang about "insane" demand for its AI chips support this narrative well, painting a bright picture for continued revenue growth.

Additionally, the discounted cash flow (DCF) suggests an intrinsic value of approximately $64.48, which is significantly lower than the current trading price. This discrepancy implies that the stock may be currently overvalued in the short term but reinforces the long-term growth potential given the company’s market-leading position in AI technologies and partnerships, like the recent collaboration with Accenture.

NVIDIA The earnings per share (EPS) of $2.14 provides a foundation for NVIDIA’s strong performance, and with an upcoming earnings announcement on November 19, market sentiment may further prime the stock for volatility.

Overall, most analysts rate NVDA as a consensus 'Buy,' with a substantial majority of analysts leaning positively, indicated by 40 'Buy' ratings and only 3 'Sell' ratings.

Predictions

For the next trading day (October 3, 2024), NVDA is likely to experience upward momentum toward the resistance level of $123.74, especially with the added support from bullish market sentiment and strong demand indicators. Over the upcoming week, if the company’s performance narrative continues to highlight robust demand for its products, NVDA could solidify its position and potentially backtest higher levels.

Long-term Investment Potential

Long-term investment prospects for NVDA remain optimistic, driven by the company's pivotal role in AI and machine learning technologies. Despite its current valuation challenges, the stock holds significant appeal given the sustained demand for NVIDIA's innovations. This positions the company strategically for robust earnings growth in dynamic markets. The combination of strong historical performance, continued demand for its AI products, strategic partnerships, and market leadership underpins this evaluation. Investors should remain vigilant about the stock's near-term fluctuations, particularly around the resistance level and the approach of the upcoming earnings announcement, but the long-term outlook remains favorable amidst the rapidly evolving tech landscape.

Check full NVIDIA forecast and analysis here.