Sign InSummary
NVIDIA Corporation, with a market cap of $1.10 trillion, has experienced significant price volatility but shows overall upward growth potential, driven by investor optimism and the company's dominance in the AI chip space, although caution is advised due to possible overvaluation. (Analysis conducted on July 24, 2023)
Fundamental Analysis
NVIDIA Corporation, with the ticker symbol NVDA, has a sizeable market capitalization of $1.10 trillion, which illustrates its significant positioning in the market. This vast market cap is backed by an outstanding share count of 2.47 billion shares.
Although the last close was at $446.12 on July 24, 2023, NVIDIA's stock has experienced a range between a high of $480.88 and a low of $108.13 in the past year. This wide-ranging swing signifies a possible volatility in the stock, but with a price high of $451.09 during the last trading session, NVIDIA appears to demonstrate an overall upward growth trajectory.
The Earnings Per Share (EPS) is reported to be at $1.93. When compared alongside the relatively high Price/Earnings ratio of 231.15, the figures point towards substantial investor optimism concerning NVIDIA's future profitability potential.
Moreover, the company's upcoming earnings announcement scheduled for August 23, 2023, could potentially provide a catalyst for additional stock price movements. This becomes even more relevant with recent news indicating that NVIDIA is potentially dominating the AI chip space and is posed to unlock a considerable $300 billion in AI revenue by 2027. The news on AI's significant growth and its direct impact on NVIDIA's business landscape implies heightened investor interest as the promise of augmented sales continues to strengthen.
Technical Analysis
The Relative Strength Index (RSI) stands at 60, pointing towards moderately bullish sentiments. The moving averages also suggest a similar trend. The 50-day moving average of $392.77 and the 200-day moving average of $246.59 illustrate an uptrend for NVIDIA's share price, implying the stock is experiencing a bullish momentum.
Furthermore, the Moving Average Convergence Divergence (MACD), an important metric indicating price momentum, is at 10.27 on a 3-month period. This value indicates positive momentum for the stock and further augments the bullish sentiments.
However, the trading volume was somewhat lower than the average volume (36.67 million against 49.58 million), suggesting less enthusiasm among traders on the latest trading day.
Estimations & Valuation
The Discounted Cash Flow (DCF) valuation indicates a price of $447.47. This is closely aligned with the closing price of NVIDIA, suggesting that the stock is properly valued. On the other hand, the consensus target is at $277.20, whereas the price targets range between a high of $600 and a low of $133. Given the current stock price, these estimations indicate substantial divergences, suggesting a possible unpredictability in its future performance.
Final Evaluation
Based on a synthesis of the aforementioned indicators, NVIDIA shows potential for future growth, dominantly facilitated by AI developments. Investors may expect a continuation of the bullish trend as the AI sector expands. Yet, they should also be aware of the note of caution suggesting overvaluation.
Therefore, the final categorization for the NVIDIA stock would initially be a strong Hold. Investors may consider investing following dips in the price, or for those who already have holdings, the company's strong prospects in AI could herald a prosperous future. However, due to the possibility of an overvaluation, informed watchfulness is recommended.
