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Here's Why NVIDIA Stock is Worth Adding to Your Portfolio
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NVIDIA Corporation (NVDA - Free Report) has generated significant returns for investors last year and has the potential to exceed expectations this year as well. The stock has soared 81.3% in the past one year, significantly outperforming the industry’s gain of 46%.
Let’s check out the reasons for this impressive surge in share price and consider why NVIDIA will continue its momentum in this year as well.
Key Catalysts
NVIDIA’s innovative product pipeline and strength in gaming and high-end notebook GPUs have kept it well positioned. Last year launch of GeForce NOW and SHIELD TV remained key growth drivers. The recently introduced TITAN V graphics processing unit (“GPU”) is another tailwind.
The company is in the process of gaining market share among gaming service providers, thereby strengthening its position in the workstation-based gaming services in supercomputing segments. The advanced gaming cards also add value to PC manufacturers. NVIDIA has decided to license its graphics IP, which should generate strong revenues.
Moreover, its chips meant for the industries such as artificial intelligence (AI), deep learning, machine learning technologies, advanced driver assistance system (ADAS) as well as data centers are further positives as these industries have started gaining momentum. NVIDIA’s focus on GRID platforms can increase GPU adoption in data centers, giving it an advantage against its competitors.
Furthermore, the company’s partnership with Japanese company — Komatsu — to bring in AI computing platform to the construction and mining equipment industry is a testament of its AI initiatives. Its alliance with Baidu for bringing in AI technology in cloud-computing services, self-driving vehicles and home assistance spaces will stoke growth going ahead.
The stock has seen solid earnings estimate revision activity in the last 30 days. Estimates for the current quarter have risen from $1.13 per share to $1.15 per share, while for fiscal 2018 estimates have risen from $4.13 per share to $4.19 per share. It has also topped the Zacks Consensus Estimate by an average of 33.5% in the trailing four quarters.
Notably, Semiconductor – General industry to which NVIDIA belongs currently has a Zacks Industry Rank of 4 out of more than 250 industries, suggesting it is well-positioned from this perspective, especially when compared to the other segments.
Bottom Line
NVIDIA remains one of the best performers in the semiconductor space. Given the accelerated momentum in AI, gaming, datacenter and automotive technology, we believe this Zacks Rank #1 (Strong Buy) stock, with a long-term EPS growth estimate of 11.2%, will continue to rally in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Many might argue that NVIDIA, with its hefty forward P/E valuation of 46.2x, compared with the industry average of 19.4x, is a risky bet. Nevertheless, we beg to differ as high valuations and increasing share prices do not necessarily indicate that the stock does not have much upside potential left.
NVIDIA has grabbed attention with striking performances on the back of impressive earnings results and strong growth projections.
Furthermore, with its continued efforts toward attaining a leading position in several emerging industries such as AI, deep learning and driverless cars industry, NVIDIA has outpaced others in the space, including Advanced Micro Devices (AMD - Free Report) , Intel Corp. (INTC - Free Report) and STMicroelectronics (STM - Free Report) , in terms of growth.
Therefore, we believe investing in this stock will yield promising returns for your portfolio in the short term.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Here's Why NVIDIA Stock is Worth Adding to Your Portfolio
NVIDIA Corporation (NVDA - Free Report) has generated significant returns for investors last year and has the potential to exceed expectations this year as well. The stock has soared 81.3% in the past one year, significantly outperforming the industry’s gain of 46%.
Let’s check out the reasons for this impressive surge in share price and consider why NVIDIA will continue its momentum in this year as well.
Key Catalysts
NVIDIA’s innovative product pipeline and strength in gaming and high-end notebook GPUs have kept it well positioned. Last year launch of GeForce NOW and SHIELD TV remained key growth drivers. The recently introduced TITAN V graphics processing unit (“GPU”) is another tailwind.
The company is in the process of gaining market share among gaming service providers, thereby strengthening its position in the workstation-based gaming services in supercomputing segments. The advanced gaming cards also add value to PC manufacturers. NVIDIA has decided to license its graphics IP, which should generate strong revenues.
Moreover, its chips meant for the industries such as artificial intelligence (AI), deep learning, machine learning technologies, advanced driver assistance system (ADAS) as well as data centers are further positives as these industries have started gaining momentum. NVIDIA’s focus on GRID platforms can increase GPU adoption in data centers, giving it an advantage against its competitors.
Furthermore, the company’s partnership with Japanese company — Komatsu — to bring in AI computing platform to the construction and mining equipment industry is a testament of its AI initiatives. Its alliance with Baidu for bringing in AI technology in cloud-computing services, self-driving vehicles and home assistance spaces will stoke growth going ahead.
NVIDIA Corporation Revenue (TTM)
NVIDIA Corporation Revenue (TTM) | NVIDIA Corporation Quote
Positive Estimate Revision
The stock has seen solid earnings estimate revision activity in the last 30 days. Estimates for the current quarter have risen from $1.13 per share to $1.15 per share, while for fiscal 2018 estimates have risen from $4.13 per share to $4.19 per share. It has also topped the Zacks Consensus Estimate by an average of 33.5% in the trailing four quarters.
Notably, Semiconductor – General industry to which NVIDIA belongs currently has a Zacks Industry Rank of 4 out of more than 250 industries, suggesting it is well-positioned from this perspective, especially when compared to the other segments.
Bottom Line
NVIDIA remains one of the best performers in the semiconductor space. Given the accelerated momentum in AI, gaming, datacenter and automotive technology, we believe this Zacks Rank #1 (Strong Buy) stock, with a long-term EPS growth estimate of 11.2%, will continue to rally in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Many might argue that NVIDIA, with its hefty forward P/E valuation of 46.2x, compared with the industry average of 19.4x, is a risky bet. Nevertheless, we beg to differ as high valuations and increasing share prices do not necessarily indicate that the stock does not have much upside potential left.
NVIDIA has grabbed attention with striking performances on the back of impressive earnings results and strong growth projections.
Furthermore, with its continued efforts toward attaining a leading position in several emerging industries such as AI, deep learning and driverless cars industry, NVIDIA has outpaced others in the space, including Advanced Micro Devices (AMD - Free Report) , Intel Corp. (INTC - Free Report) and STMicroelectronics (STM - Free Report) , in terms of growth.
Therefore, we believe investing in this stock will yield promising returns for your portfolio in the short term.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>