Nvidia NVDA has been one of the hottest and most beloved Tech names over the last several years. It has been one of the biggest winners of the COVID pandemic, and its products and services have never been in more demand as they are right now. The stock has been so beloved for so long now, that Jim Cramer of CNBC even named his dog Nvidia.
With its recent acquisition of Softbank’s Arm, and with the increasing demand for its chips and processors, Nvidia is forecasted to grow even more in 2020. However, has the stock moved too high and too fast for its own good? Can we strongly and unequivocally recommend buying Nvidia right here and right now?
The stock has skyrocketed this year, but the picture is not all rosy. Tech names have been crushed over the last 3 weeks, and Nvidia’s technical indicators are not great. The macro economic indicators are questionable at the moment as well, and trade relations with China could be crucial for the stock’s performance. There are some indicators out there as well that point out to a possible tech bubble, similar to that of the dotcom crash in 2000. With the way Nvidia’s stock has moved, they would surely be affected by this.
Qai’s deep learning algorithms are very interested in the current state of Nvidia’s stock, as well as its growth potential. And, as a company that provides investing advice to millions around the globe, we think you should be, too. Our Artificial Intelligence (“AI”) scours financial data of more companies than you can count – and we’re ready to share our results.
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Nvidia Corp (NVDA)
Nvidia has been at the forefront of the recent Tech slide, and closed down 0.41% yesterday to a price of $498.54 vs its 10-day price average of $502.33 and its 22-day price average of $509.69. However, there is great interest in this stock as it closed yesterday with a trading volume of 19,667,486.
The stock has been one of the highest-flying names of the year, up 108.09%. It is a company at the center of tech innovation and has been crucial in keeping the world moving throughout the pandemic. Its chips and products have never been in more high demand as they are now, and its acquisition of Softbank’s Arm is sure to expand its operations even more. The stock has already skyrocketed, and many believe it has even more room to run. Just as recently as last week, despite the NASDAQ NDAQ briefly entering correction territory, Needham analyst Rajvindra Gill upped his price target on the stock to $700 from $600 for example.
Nvidia’s financials have shown robust growth over the last 3 years, and are projected to grow even more over the next 12 months. Nvidia’s revenue grew by 19.66% in the last fiscal year and by 34.5% over the last three fiscal years, Operating Income grew by 31.1% in the last fiscal year and by 16.23% over the last three fiscal years, and EPS grew by 20.44% in the last fiscal year and by 12.94% over the last three fiscal years. Revenue was $10918.0M in the last fiscal year compared to $9714.0M three years ago, Operating Income was $2846.0M in the last fiscal year compared to $3210.0M three years ago, and EPS was $4.52 in the last fiscal year compared to $4.82 three years ago. ROE was slightly down in the last year compared to 3 years ago, as it was 25.95% in the last year compared to 46.05% three years ago, however Forward 12M Revenue is expected to grow by 11.18% over the next 12 months. The stock is also trading with a Forward 12M P/E of 49.88.
So, What’s the Verdict?
Q.ai is here to help you break through the clutter and nonsense, and one of the easiest ways to do that is to provide a simple report card. For Nvidia, our ratings are relatively towards the middle of the road. Our AI systems rated Nvidia D in Technical, B in Growth, C in Momentum Volatility, and B in Quality Value.
Although the stock’s technical score is not as good as its other scores, the company’s innovation skills, product quality, and forecasted growth cannot be ignored. Additionally, as social distancing and work from home continue to be a thing, we anticipate the demand for its products and services to keep growing in the near future. While we have some concerns about the stock overheating and a potentially stretched valuation, Nvidia should still grow. Q.ai has given Nvidia a Neutral rating for September, and cannot strongly advise investors to buy the stock one way or another.
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