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NVIDIA Hits 52-Week High, Gains Steam on HPC Technology

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Shares of NVIDIA Corporation (NVDA - Free Report) hit a new 52-week high of $53.28 on Jul 12, eventually closing at $52.80. The stock has delivered a strong one-year return of 165.5% and a year-to-date return of 60.2%. The average trading volume for the last three months aggregated approximately 9.95M.

What is Driving the Stock Upward?

Shares of NVIDIA have been trending upward since the company introduced its latest HPC technology – Tesla P100 GPU Accelerator, which NVIDIA claims will provide higher efficiency and performance to enterprises while incurring 70% lower capital and operational costs.

Also, recently, NVIDIA introduced NVIDIA GRID and Tesla M10 GPU. The company’s NVIDIA GRID is a powerful GPU-based platform that supports corporate virtualized desktops in data centers, cloud gaming services and design software-as-a-service. NVIDIA also introduced Tesla M10 GPU, which allows enterprises to connect up to 64 users per board or up to 128 users per server with just two boards. This will help organizations in lowering their per user cost.  We believe these product launches will act as a catalyst for the company.

Going forward, NVIDIA’s shield gaming device is another growth avenue. In fiscal 2016, the company unveiled NVIDIA SHIELD Android TV device and GeForce NOW, which allows players to stream video games from the cloud to their SHIELD devices. NVIDIA also launched the latest SHIELD tablet, powered by its 192-core Tegra K1 mobile processor.

Adding to the positives, the stock is seeing solid activity on the earnings estimate revision front as well. Over the last 60 days, 8 out of 12 estimates for NVIDIA were revised upward for fiscal 2017. The Zacks Consensus Estimate for fiscal 2017 went up 6.8% (10 cents) to $1.56.

With respect to earnings surprise, this Zacks Rank #1 (Strong Buy) stock has surpassed the Zacks Consensus Estimate in the last four quarters with an average positive surprise of 57.9%.

On May 12, 2016, the company reported better-than-expected first-quarter fiscal 2017 results. The company posted earnings of 39 cents per share for the quarter, up on a year-over-year basis. The Zacks Consensus Estimate was pegged at 31 cents per share.

Revenues not only increased 13.4% year over year to $1.305 billion but also surpassed the Zacks Consensus Estimate of $1.267 billion. The year-over-year increase was primarily due to better-than-expected growth in GPUs gaming platform, high-performance computing, datacenter and Tegra automotive platforms.

Nonetheless, competition from the likes of Intel (INTC - Free Report) and QUALCOMM Inc. (QCOM - Free Report) remains a near-term headwind. 

Stock to Consider

In the broader technology sector, one can consider Stratasys Ltd. (SSYS - Free Report) , also sporting a Zacks Rank #1.

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