HomeMost PopularNvidia: The Ultimate Bear Trap Is Here

Nvidia: The Ultimate Bear Trap Is Here

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Despite initial skepticism about Nvidia Corporation’s (NASDAQ:NVDA) growth potential due to geopolitical risks, recent developments have changed my perception. The company’s impressive earnings report, along with positive momentum and substantial growth opportunities, suggest that Nvidia’s stock has room for further appreciation.

Nvidia’s Growth Story Continues

During Q2, Nvidia exceeded expectations, reporting a 101.6% YoY increase in revenue to $13.51 billion, driven by strong data center sales. The company’s non-GAAP EPS of $2.70 also surpassed estimates. Nvidia’s positive Q3 outlook, projecting $16 billion in revenues, further supports its growth trajectory.

The generative AI industry’s projected 40%+ CAGR provides a favorable market for Nvidia to expand its total addressable market. Additionally, strong demand for Nvidia’s flagship H100 GPUs, plans to increase chip production to 2 million units in 2024, and endorsement from Taiwan Semiconductor (TSM) fuel optimism for the company’s future.

Furthermore, Nvidia’s development of the Grace Hopper super chip and collaboration with TSMC on silicon photonics technology indicates a commitment to innovation and potential for future growth.

Potential Upside and Risks

Based on a discounted cash flow (DCF) model, Nvidia’s fair value is estimated at $446.10 per share, aligning closely with its current market price. However, analyst consensus suggests a fair value above $600 per share, implying potential upside. Tech companies often trade at a premium, further supporting a bullish outlook.

Considering possible risks, a weaker global economy could impact Nvidia’s sales growth. Additionally, geopolitical uncertainties, such as export restrictions on advanced chips, pose long-term challenges to Nvidia’s performance.

The Bottom Line

Despite macro and geopolitical risks, Nvidia’s recent sales data and improved guidance indicate a continued growth story with more potential for its stock. With robust technical support and ongoing business momentum, the shares are expected to rebound in the near future. A long-term investment in Nvidia aligns with the company’s position at the forefront of the generative AI revolution.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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