That’s a decent beat, but it’s probably not what prompted the explosive move in NVDA stock. I’ll admit, it’s commendable that Nvidia’s quarterly earnings per share of $1.09 outpaced Wall Street’s estimate of $0.92 per share. Additionally, Nvidia’s Gaming segment revenue fell 38% on a year-over-year basis. Nvidia’s Fiscal Q1-2024 sales of $7.19 billion did beat the consensus forecast of $6.52 billion but also decreased 13.3% year-over-year. Additionally, Nvidia CEO Jensen Huang emphasized in the company’s first-quarter earnings call that the rise of generative AI has been Nvidia’s “iPhone moment.” Surely, it’s not a coincidence that both Sur and Bryson mentioned AI in their commentary to justify their lofty NVDA stock price targets. Do Nvidia’s results really justify these ultra-optimistic price targets, though?Īgain, I suspect that the current euphoria surrounding Nvidia is due to the market’s obsession about AI. Meanwhile, Wedbush analyst Matt Bryson raised his price target on Nvidia shares from $290 to $490. JPMorgan Chase ( NYSE:JPM) analyst Harlan Sur literally just doubled its price target on NVDA stock from $250 to $500. Price Targets for Nvidia Stock May be Too High Additionally, they’re picking out the positive points from Nvidia’s Q1 earnings and guidance. They’re focused on anything and everything related to AI now. The problem is that many people simply don’t care about Nvidia’s valuation right now. Nvidia’s trailing price-to-book (P/B) and price-to-sales (P/S) ratios are also far above their sector medians. In the case of Nvidia, its GAAP trailing 12-month price-to-earnings (P/E) ratio of over 175.5x is substantially higher than the sector median of 23.6x. Just remember that vertical share price moves can stretch a company’s valuation. I’ll admit, it probably won’t be long before Nvidia’s market cap hits $1 trillion (currently near $940 billion), at which point more bandwagon-jumping traders will likely start buying the stock. Certainly, the stock can go higher and I wouldn’t dare to make a bearish call on Nvidia. Meanwhile, Nvidia stock bounced from its October 2022 low of around $112 to nearly $395 earlier today. These are important factors to monitor, as they could actually be used as contrarian indicators to gauge how people feel about a particular company and stock. Furthermore, the crowd wisdom indicator on Nvidia is strongly positive. The news sentiment surrounding Nvidia is almost entirely positive, and bloggers are mostly bullish on NVDA stock. It’s fine to be bullish on Nvidia, but the market’s sentiment has crossed the line into utter euphoria now. That’s easier said than done when everybody is bullish on Nvidia and when NVDA stock gained 24.35% in a single trading session today. In times like this, financial traders have to keep a cool head and avoid headline hype. NVDA Stock Goes from Steep Rise to Absolutely Vertical Yet, it may be time to exercise caution as NVDA stock goes vertical, and some analysts’ price targets bake a great deal of future growth into the cake. Investors are highly interested in Nvidia this year because the company makes hardware components that power applications for generative artificial intelligence (AI).Īs we’ll discover, Nvidia is riding high on the AI trend, and analysts are taking note of this. However, people are strongly focused on machine learning in 2023. Nvidia is a chip giant that’s known for manufacturing graphics processing units (GPUs) for video game consoles. Plus, the company’s current-quarter sales guidance sets a high bar that Nvidia will now have to clear. I am neutral on NVDA stock because Nvidia’s Fiscal Q1-2024 results weren’t as great as some folks might assume they are. Nvidia ( NASDAQ:NVDA) stock is on a rocket ride today, but be careful, as the euphoric sentiment likely won’t last forever.
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