Nvidia
Jakarta, Indonesia, 8th September 2013: Nvidia Corporation in Indo Game Show 2013 event in Jakarta Convention Center, Jakarta, Indonesia. Nvidia is one of the major players in PC video game GPU market in Indonesia.

The Nvidia stock price is hovering near an all-time high as analysts remain optimistic about the company. The NVDA stock is trading at $822, which is a few points below its all-time high of $835. This values the company at more than $510 billion, making it the 12th biggest company in the world.

Nvidia’s growth path

Nvidia is a leading technology company that provides Graphical Processing Units (GPUs) that are essential in the computing industry. Its products are found in PCs, Bitcoin and Ethereum mining rigs, autonomous cars, and data centres. 

Nvidia has been in a strong growth path. The company has grown its total revenue from more than $6.9 billion in 2017 to more than $16.8 billion in 2020. At the same time, the company’s profit has jumped from $1.66 billion to more than $4.33 billion.

The company said that its revenue increased by 84% year on year to more than $5.66 billion in its recent quarterly earnings. Its gaming revenue came in at $2.8 billion while its PRo Vis revenue rose to $372 million. Its data center revenue soared to more than $2 billion. 

The company is seeking to expand its business in the CPU industry by acquiring Arm Holdings for $40 billion. Arm is a leading chip company that pioneered the ARM processors that are based on the Reduced Instruction Set Computer (RICs) architecture. It competes with x86 processors that are based on Complex Instruction Set Computing (CISC). 

Analysts optimistic about NVDA

Most analysts accept that Nvidia stock price is a bit overvalued. Furthermore, the company is trading at a forward PE ratio of 51.70. In contrast, other companies like Taiwan Semiconductor, Broadcom, and AMD have a forward PE of less than 45. The company also has a price to sales ratio of 20, which is significantly bigger than that of the other companies.

Additionally, a Discounted Cash Flow (DCF) calculation shows that Nvidia’s current price is 86.6% overvalued, as shown below.

Nvidia DCF

Still, they believe that the company’s growth helps to justify this valuation. Indeed, many analysts expect that the stock will keep rising. Those at Keycorp expects that the Nvidia stock price will rise to $950 while those at BMO Capital Markets, Wells Fargo, Raymond James, and Bank of America expect it to rise to more than $900.

So, what next for the NVDA share price?

Nvidia stock price analysis

Nvidia Stock Price
Nvidia stock price chart

My last prediction of Nvidia stock price was wrong. In the article, I wrote that the stock would decline after earnings because of the rising wedge pattern that was forming. The stock has surged by more than 34% since I did the article. 

Looking at the daily chart, we see that the stock remains above the 50-day and 200-day moving averages while the Relative Strength Index (RSI) has moved to 80. This makes it the most overbought it has been since September last year. 

Therefore, there is a possibility that the Nvidia stock price will rise to about $1,000 later in 2021. However, I can’t rule out a situation where the stock sees some sell-off as some bulls take profit. This could happen towards the upcoming earning season.

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