2024-02-14 12:35:00
© Reuters.
Investing.com – While many technology stocks fell on Tuesday on the back of a better-than-expected US CPI, with the index closing the day down 1.8%, Nvidia (NASDAQ: ) managed to pull off a good performance, down 0.17%. Only, a small loss was also canceled out in after-market trading.
Online commerce giant Amazon.com Inc. (NASDAQ:), for its part, saw its shares fall 2.15% yesterday, allowing Nvidia to take its place as the fifth largest share in the world. By capitalization, it is behind Microsoft (Nasdaq:), Apple (Nasdaq:), Aramco (Tadawul:), and Alphabet (Nasdaq:).
In fact, Nvidia’s market value now stands at $1.781 billion, compared to Amazon’s $1.751 billion. Note that at Tuesday evening’s closing price, Nvidia had posted gains of more than 230% over the past 12 months, while Amazon had grown “only” 69%.
You should also remember that the strong rise in Nvidia stock is the result of strong demand for semiconductors that power advanced artificial intelligence and investor appetite for companies that manufacture chips.
However, given how far it has risen since the start of 2023, the question arises as to whether the stock still has potential, or whether a correction should be expected.
However, InvestingPro data tips the scales towards the latter, suggesting that the stock is now overvalued.
In fact, Nvidia’s fair value, which combines 13 recognized financial models, is offered at $597.17, or 17.2% below Tuesday’s closing price.
On the analyst side, the average target of $701.66 translates to a downside risk of 2.7%.
However, the short-term fate of NVIDIA stock will depend mainly on the quarterly results expected next week, February 21.
Analysts expect EPS to be $4.56, 13.4% higher than the previous quarter, and more than 5 times higher than last year.
Also, turnover is expected to reach $20.334 billion in accordance with expectations, or 12.2% more than in the previous quarter, and a growth of more than +100% year-on-year.
It’s also worth noting that Nvidia has exceeded earnings and revenue expectations for the last four straight quarters, beating EPS expectations by 18.7% and revenue expectations by 12.5% in the previous quarter.
Given the sharp rise in Nvidia shares and the habit investors have developed of seeing the company exceed expectations, disappointment in next week’s expected data could lead to a violent decline in movement.
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