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More Rally Awaits ETFs as Nvidia Hovers Around $2Tn Market Cap?

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Nvidia Corp. (NVDA - Free Report) is poised to become the first semiconductor company to reach a $2 trillion valuation, marking an important milestone in its rise as the primary beneficiary of the surge in artificial intelligence-related stocks over the past year. The company's shares logged a 6.4% increase last week, closing at a valuation of $1.97 trillion, briefly surpassing the $2 trillion mark during intraday trading on Friday.

This solidifies Nvidia's position as the world's fourth-most valuable company, trailing only behind Microsoft Corp. (MSFT), Apple Inc. (AAPL), and Saudi Aramco in terms of market capitalization. However, the stock slumped 2.1% in the past five days and Nvidia is currently sitting on $1.978 trillion of market cap.

Unlike Apple and Microsoft, which took over two years to transition from a $1 trillion to a $2 trillion valuation, Nvidia is on pace to achieve this feat in less than a year, helped by an AI excitement. Notably, the rally in Nvidia's shares last week followed an impressive earnings report.

Inside Nvidia’s Q4 Earnings

Earnings per share came in at $5.16, easily beating the Zacks Consensus Estimate of $4.55 and up a staggering 486% from the year-ago quarter. Revenues skyrocketed 265% year over year to a record $22.1 billion and edged past the consensus mark of $20.31 billion (read: Nvidia ETFs to Tap for More Growth Post Blowout Q4 Earnings).

The company provided guidance that exceeded expectations, driven by increased AI investments from major customers such as Meta Platforms Inc. (META - Free Report) . Nvidia's domination in the market for graphics chips which is needed for computing tasks in AI applications has positioned it favorably in the current environment.

Nvidia Price Target

Based on short-term price targets offered by 38 analysts, the average price target for Nvidia comes to $833.80. The forecasts range from a low of $475.00 to a high of $1,200.00. The average price target represents an increase of 7.36% from the last closing price of $776.63. While Nvidia lacks on value, the stock has upbeat momentum and growth score of A.

Broker Rating

Nvidia currently has an average brokerage recommendation (ABR) of 1.20 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 40 brokerage firms. The current ABR compares to an ABR of 1.22 a month ago based on 39 recommendations.

Of the 40 recommendations deriving the current ABR, 35 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 87.5% and 5% of all recommendations. A month ago, Strong Buy made up 84.62%, while Buy represented 7.69%.

What Do Technicals Say?

Nvidia’s closing price was $791.12 as of Feb 29, 2024. NVDA's 200-day moving average is 481.62, 100-day moving average is 537.50 and 50-day moving average is 615.16, 20-day moving average is 725.50 and 5-day moving average is 786.77. Since, near-term moving averages are trending higher than the long-term average, there are chances of a price gain in NVDA shares in the near term.

ETFs to Tap

The stock’s RSI (14) value is 73.97, which means that the stock has just entered the overbought territory. On the contrary, Nvidia-heavy ETF VanEck Vectors Semiconductor ETF (SMH - Free Report) has an RSI value of 68.0 and bullish pattern of moving averages. Hence, investors who prefer diversification and less risks, may play NVDA-heavy ETFs like SMH, AXS Esoterica NextG Economy ETF (WUGI - Free Report) , Global X Robotics & Artificial Intelligence ETF (BOTZ - Free Report) , MeetKevin Pricing Power ETF (PP - Free Report) and Pacer Data and Digital Revolution ETF (TRFK - Free Report) .

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