NVIDIA (NVDA) Stock Looks to Regain Strength on Q1 Earnings

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Chip maker NVIDIA (NVDA) is scheduled to report first-quarter earnings after the market close May 16. Analysts expect earnings of $0.79 on revenue of $2.2 billion, versus $2.05 and $3.2 billion during the same period last year. NVDA stock is up 23.8% since the start of the year.

Technical Analysis

NVDA stock was recently trading at $165.30 down $127.46 from its 12-month high and $40.84 above its 12-month low. InvestorsObserver’s Stock Score Report gives NVDA a 30 long-term technical score and a 5 short-term technical score. The stock has recent support above $150 and recent resistance below $190. Of the 27 analysts who cover the stock 17 rate it Strong Buy, 1 rate it Buy, 7 rate it Hold, 0 rate it Sell, and 2 rate it Strong Sell, NVDA gets a score of 25 from InvestorsObserver’s Stock Score Report.

Analysts' Thoughts

After close to four years of strong outperformance, NVDA stock ran into weakness mid-2018 and the stock is off sharply from its previous highs. NVDA is very sensitive to the trade war with China. The stock sold off sharply in the latter part of 2018 as trade tensions escalated and then started to recover in 2019 as negotiations appeared to be going well between the two countries. After President Trump announced negotiations had stalled and new tariffs would be imposed, NVDA stock sold off again. Earnings growth has definitely slowed after years of blistering growth and earnings up 60% per annum the last five years. Analysts expect profits to rise 34% next year, and by just 11% annually the next five years. The company has a good solid earnings track record and the street expects another earnings beat with a whisper number of 81 cents for the quarter. China concerns will continue to weigh on the stock, but as the two nations continue to negotiate the market will react positively as any signs of a deal are made public. It may take a while for a true trade deal to be reached, but as it is in both country’s best interest to reach a deal it will happen at some point and the long-term outlook for NVDA is positive as long as the company continues to outpace analyst estimates. Analysts see a lot of upside in the stock with an average price target of $196.88.

About NVIDIA Corporation

Nvidia is a leading designer of graphics chips that enhance the experience on computing platforms. The firm's chips are used in a variety of end markets, including high-end PCs for gaming, data centers, and automotive infotainment systems. In recent years, the firm has broadened its focus from traditional PC graphics applications such as gaming to more complex and favorable opportunities, including artificial intelligence and autonomous driving, which leverage the high-performance capabilities of the firm's graphics processing units.

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