Nvidia (NVDA) shares are now just a tad under their lifetime record of $149, showing the solidity of investor sentiment about the company’s AI-fueled prospects. On Tuesday, the stock went up 4.89% and closed at $147.01 per share, which analysts described as bullish notes on the company’s AI-focused chips before its report that is due on November 21.
The trailing year return of NVDA is 196.92% which is far better than the S&P 500’s return of 24.05%. Total returns over the last five years are 2,683.59% proving Nvidia to be in the tech and AI industry.
The financial performance reveals that Nvidia is the market leader in AI and semiconductor industries. Key highlights include:
Revenue (TTM): $96.31 billion
Profit Margin: 55.04%
Return on Equity (ROE): 123.77%
Levered Free Cash Flow (TTM): $33.73 billion
In its last reported quarter it generated a record revenue of $30.04 billion YoY growth of 122.4% majorly due to rise in demand for AI. The data center segment generated more than 70% of the overall sales, and gaming sales recovered with a 22% YoY growth due to the lessened macroeconomic headwinds.
Before its earnings, Nvidia has benefited from positive endorsement from Wall Street. The following price targets were revised higher in Stifel and Truist Securities to $180 and $167 as a result of anticipated strong growth. Nvidia continues to be the go-to provider of GPUs for generative AI and enterprises, wherever they operate from.
Furthermore, a major growth segment is in the development of artificial intelligence and simulation with the car DRIVE platform for autonomous vehicles, and the Omniverse for the metaverse.
From the price action chart of NVDA, the price action shows a good bullish trend that is associated with higher highs and higher lows. The stock is trading slightly below at its 52-week high and also its all time high of 149 which is backed by a more stronger fundamentals on side of investor and better volumes.
Support Level: $130 in case of retracements from Earnings report
Resistance: Testing the all-time high of $149
Momentum: Bullish
As evidenced by its past, earnings releases have always sparked high levels of volatility for Nvidia and therefore, it presents a crucial period for both the short-term speculation and long shelf investment players.
1. Market Leadership: Nvidia dominates the AI and data center markets, with advanced GPUs like the A100 and H100 leading the charge.
2. Financial Strength: Strong margins, profitability, and free cash flow provide a robust foundation for growth.
3. AI Boom: Nvidia is uniquely positioned to capitalize on the surging demand for AI-driven technologies.
1. High Valuation: At a trailing PE ratio of 69.02, Nvidia’s stock is expensive, increasing vulnerability to market corrections.
2. Geopolitical Risks: Export restrictions, particularly to China, could dampen revenue growth.
3. Competition: AMD’s MI300 chips and Intel’s GPU advancements pose long-term competitive risks.
Nvidia’s leadership in AI, strong financial performance and favorable technical trends make it a Buy for long-term investors with a high-risk tolerance. However, given its elevated valuation, cautious investors may prefer to wait for post-earnings volatility before making a decision.
Nvidia’s upcoming earnings report will be a pivotal moment, reflecting its dominance in the AI and semiconductor industries. While risks like geopolitical tensions and valuation concerns persist, the company’s innovation and market leadership offer significant upside potential. Investors should keep a close eye on earnings projections, AI demand trends, and potential regulatory impacts.
Whether you’re bullish or cautious, Nvidia remains a compelling player in the rapidly evolving tech landscape.