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Shares of Nvidia (NVDA - Free Report) opened more than 3% higher on Tuesday after one key analyst said that a recent decline in the previously-red-hot stock presents a great buying opportunity, especially considering the company’s strength in artificial intelligence, autonomous cars, gaming, and more.
“[Nvidia is] one of the more unique investments in semis/technology, levered to multiple 10x growth markets in artificial intelligence (AI), gaming, virtual reality and autonomous cars (AV),” wrote Bank of America Merrill Lynch analyst Vivek Arya.
Bank of America Merrill Lynch reiterated its buy rating for the chipmaker and added Nvidia to its US1 top ideas list. The firm also reiterated its $300 price target for the stock, which represents a 36% upside to its Monday close.
A key factor behind Bank of America’s bullish stance is Nvidia’s continued dominance of the PC gaming market. The note mentioned that the company’s gaming cards are routinely selling for 50% more than their suggested list prices, indicating that demand from gamers is still quite high.
“The proliferation of e-sports which has become a global phenomenon and is attracting a growing base of gamers and viewers. The next catalyst for PC gaming could be launch of new Volta based gaming GPUs (1100 series) in 2H18,” Arya said.
Arya’s note helped Nvidia rebound slightly after a brutal start to the week for the entire technology sector. Tech’s recent volatility has actually taken the wind out of Nvidia’s sails for the past two weeks, and the stock is now about 10.3% off its latest highs.
Still, with trade fears and political turmoil looming, it is unclear whether NVDA will hold on to its early morning gains. The tech-heavy Nasdaq opened higher but quickly fell into the red on the day, while the broader S&P 500 was fighting to remain in the green in morning trading. The 30-stock Dow Jones index looks ready to lead the day, with consumer staples remaining poised.
Interestingly, Nvidia’s recent selloff—combined with its improving earnings outlook—has helped the company’s valuation become significantly less stretched. The stock is now trading at about 34.2x forward 12-month earnings, its lowest earnings multiple in roughly a year. Over that timeframe, the stock has traded as high as 57.4x and holds a median Forward P/E of 45.6.
Analyst sentiment for the chipmaker has remained strong recently, suggesting that the fundamental picture here is not slipping. Within the past 60 days, Nvidia has witnessed 12 positive revisions to its full-year earnings estimates, lifting our consensus projection for this period $1.53 higher. That positive revision activity has also earned NVDA a Zacks Rank #1 (Strong Buy).
Meanwhile, the company is also sporting a “B” grade for Growth in our Style Scores system. Full-year estimates are now calling for the company to witness annual earnings and revenue growth of about 28.5%, and investors have grown accustom to Nvidia blowing its expansion projections out of the water.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeneyon Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Can Nvidia (NVDA) Stock Rebound on Gaming Growth?
Shares of Nvidia (NVDA - Free Report) opened more than 3% higher on Tuesday after one key analyst said that a recent decline in the previously-red-hot stock presents a great buying opportunity, especially considering the company’s strength in artificial intelligence, autonomous cars, gaming, and more.
“[Nvidia is] one of the more unique investments in semis/technology, levered to multiple 10x growth markets in artificial intelligence (AI), gaming, virtual reality and autonomous cars (AV),” wrote Bank of America Merrill Lynch analyst Vivek Arya.
Bank of America Merrill Lynch reiterated its buy rating for the chipmaker and added Nvidia to its US1 top ideas list. The firm also reiterated its $300 price target for the stock, which represents a 36% upside to its Monday close.
A key factor behind Bank of America’s bullish stance is Nvidia’s continued dominance of the PC gaming market. The note mentioned that the company’s gaming cards are routinely selling for 50% more than their suggested list prices, indicating that demand from gamers is still quite high.
“The proliferation of e-sports which has become a global phenomenon and is attracting a growing base of gamers and viewers. The next catalyst for PC gaming could be launch of new Volta based gaming GPUs (1100 series) in 2H18,” Arya said.
Arya’s note helped Nvidia rebound slightly after a brutal start to the week for the entire technology sector. Tech’s recent volatility has actually taken the wind out of Nvidia’s sails for the past two weeks, and the stock is now about 10.3% off its latest highs.
Still, with trade fears and political turmoil looming, it is unclear whether NVDA will hold on to its early morning gains. The tech-heavy Nasdaq opened higher but quickly fell into the red on the day, while the broader S&P 500 was fighting to remain in the green in morning trading. The 30-stock Dow Jones index looks ready to lead the day, with consumer staples remaining poised.
Interestingly, Nvidia’s recent selloff—combined with its improving earnings outlook—has helped the company’s valuation become significantly less stretched. The stock is now trading at about 34.2x forward 12-month earnings, its lowest earnings multiple in roughly a year. Over that timeframe, the stock has traded as high as 57.4x and holds a median Forward P/E of 45.6.
Analyst sentiment for the chipmaker has remained strong recently, suggesting that the fundamental picture here is not slipping. Within the past 60 days, Nvidia has witnessed 12 positive revisions to its full-year earnings estimates, lifting our consensus projection for this period $1.53 higher. That positive revision activity has also earned NVDA a Zacks Rank #1 (Strong Buy).
Meanwhile, the company is also sporting a “B” grade for Growth in our Style Scores system. Full-year estimates are now calling for the company to witness annual earnings and revenue growth of about 28.5%, and investors have grown accustom to Nvidia blowing its expansion projections out of the water.
Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>