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NVIDIA Hits 52-Week High: Should it Be in Your Portfolio?

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Shares of NVIDIA Corporation (NVDA - Free Report) hit a new 52-week high of $88.77 on Nov 11, 2016, eventually closing at $87.97. The stock has delivered a strong one-year return of 195.2% and a year-to-date return of 166.9%. The average trading volume for the last three months aggregated approximately 10.02M.

What is Driving the Stock Upward?

NVIDIA’s shares have gone up approximately 30% since the company declared outstanding third-quarter fiscal 2017 results on Nov 10, 2016. Also, an encouraging fourth-quarter fiscal 2017 revenue outlook, continuous share buybacks and repurchase program coupled with regular innovative product launches drove NVIDIA shares higher.

The company posted adjusted earnings (including stock-based compensation but excluding other one-time items) on a proportionate tax basis of 83 cents per share for the quarter, up on a year-over-year basis. The Zacks Consensus Estimate was pegged at 57 cents.

Revenues not only increased 53.6% year over year to $2.004 billion but also surpassed the Zacks Consensus Estimate of $1.681 billion. The year-over-year increase was primarily due to better-than-expected growth across all the platforms that is GPUs gaming platform, Professional Visualization, datacenter and Tegra automotive platforms.

For the fourth quarter of fiscal 2017, NVIDIA expects revenues of approximately $2.10 billion (+/-2%). The Zacks Consensus Estimate is pegged at $1.767 billion.

In fiscal 2017, the company expects to return $1 billion to its shareholders. Moreover, for fiscal 2018, the company expects to return $1.25 billion to its shareholders in the form of cash dividends and share repurchases.

With respect to earnings surprise, it has surpassed the Zacks Consensus Estimate in the last four quarters with an average surprise of 24.93%.

An encouraging fourth-quarter outlook and a bright overall trend resulted in upward estimate revisions for NVIDIA. Over the last 60 days, three out of 12 estimates for NVIDIA were revised upward for fiscal 2017. The Zacks Consensus Estimate for fiscal 2017 went up 1.1% (2 cents) to $1.87.

Widely known for its video gaming chips, NVIDIA has pioneered the art and science of visual computing. With a singular focus on this field, the company offers specialized platforms for the gaming, automotive, data center and professional visualization markets. Its products, services and software deliver amazing experiences in virtual reality, artificial intelligence and autonomous cars.

NVIDIA’s foray into the autonomous vehicles and other automotive electronics space has been driving this stock higher since mid-2015. It should be noted that during the last reported quarterly results, the company witnessed a 61% year over year jump in automotive segment revenues, mainly driven by premium infotainment and digital cockpit features in mainstream cars.

Furthermore, with its sustained efforts toward attaining robust position in several emerging industries such as Artificial Intelligence (AI), deep learning and driverless cars industry, NVIDIA has moved way ahead of its main competitor Advanced Micro Devices Inc. (AMD - Free Report) in terms of growth.

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

NVIDIA carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

NVIDIA CORP Price and Consensus

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