It’s challenging to find a stock outperforming Nvidia (NASDAQ: NVDA) lately, especially following its Q4 earnings announcement on February 21.
With heightened anticipation and lofty expectations for NVDA stock, the company delivered record-breaking revenue and results surpassing even the highest estimates.
The company stands as a behemoth with a market capitalization of $1.7 trillion, showcasing remarkable performance with a 265% revenue growth and 765% growth in earnings per share (EPS). Notably, its guidance has exceeded expectations by approximately 10%, projecting Q1 revenue to reach $24 billion.
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Nvidia stock price chart
Considering that earnings came out after markets closed, NVDA stock is down -2.85% since the previous closure, adding to losses of -7.83% in the past five trading sessions.
However, Nvidia’s shares are up by 14.25% in pre-market trading, erasing the losses incurred over the recent period.
Technical analysis of NVDA stock
Currently, NVDA is positioned towards the upper end of its 52-week trading range. However, compared to the broader market represented by the S&P500 Index, NVDA is trailing slightly as the index nears a new high.
Over the past month, Nvidia Corporation has exhibited considerable volatility, trading from $599.38 to $746.11. It is trading around the midpoint of this range, suggesting potential resistance above.
Notably, a support zone has been identified from $406.32 to $408.55, derived from various trend lines across multiple time frames.
Additionally, one significant resistance area has been pinpointed at $739.01, identified by a horizontal line on the daily time frame.
In pre-market trading, NVDA stock is currently priced at $770.87, indicating that it has exceeded this resistance zone and established a new all-time high value.
Wall Street expectations for NVDA stock
As new analyst valuations are anticipated following the earnings release, the existing targets from TradingView already exhibit a sense of optimism toward this stock, as indicated by a ‘strong buy’ rating.
Out of 58 analysts, 44 assigned a ‘strong buy’ grade, 10 awarded it a ‘buy’ valuation, and 4 recommended a ‘hold.’ None suggested a ‘sell’ or ‘strong sell’ stance.
The average price target is $802.93, representing an increase of 19% from current Nvidia stock price today.
Estimated targets range from as high as $1,200 (+77.85%), reflecting an achievable target considering recent trends. In contrast, the lowest expectations dip to $535 (-20.71%), a price level NVDA stock reached at the beginning of 2024.
Opportunities and challenges in the future
During the long-awaited earnings call, it became evident that Nvidia’s growth extends beyond its AI sector. The Data Center business, which involves the sale of high-powered GPUs for AI applications, generated revenue of $18.4 billion, surpassing analysts’ expectations of $17.2 billion.
While the gaming business remains a crucial component of the company, revenue for this division reached $2.9 billion, exceeding investor expectations of $2.7 billion, a notable increase from $1.8 billion the previous year.
However, Nvidia’s stock forecast growth trajectory encounters challenges from various angles. The company faces stiff competition from its chief rival, AMD, which heavily invests in its AI chips, including the new MI300X.
Moreover, Nvidia’s customers are increasingly exploring the development of their own specialized AI chips to reduce dependence on Nvidia’s offerings. Major firms such as Amazon, Google, Meta, Microsoft, and Tesla are currently offering or actively developing their in-house AI chips.
Furthermore, in Q4, data center revenue from China experienced a significant decline due to US licensing requirements. The US government’s decision to block the sale of specific Nvidia chips to China, citing concerns about potential military applications, contributed to this decline.
Despite these challenges, the technology giant seems well-equipped to tackle any challenge, as it has shown throughout its history of adaptability.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
