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Why Is NVIDIA Stock Rallying Today?

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Aug. 29 2019, Published 1:20 p.m. ET

NVIDIA (NVDA) stock has risen more than 3% during the trading session on Thursday.

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Why is NVIDIA stock rising?

NVIDIA stock rose after China made comments about having a “calm” attitude toward trade talks. China wants to resolve the trade war with the US. According to a CNBC report, China’s Ministry of Commerce said, “We firmly reject an escalation of the trade war, and are willing to negotiate and collaborate in order to solve this problem with calm attitude.”

Like all chipmakers, NVIDIA, a leader in the GPU space, has significant revenue exposure in China. NVIDIA is waiting for approval from China for its acquisition of Mellanox. The deal is critical for the semiconductor giant. The acquisition would help expand NVIDIA’s reach in the profitable data center market.

NVIDIA stock fell nearly 0.3% on Wednesday and closed at $161.22. The company’s market capitalization is around $102 billion. Notably, the stock has gained 21.03% year-to-date. The stock has also gained 8.5% since its upbeat second-quarter earnings results on August 15. Based on the closing price on Wednesday, the stock is trading at a discount of 44.9% to its 52-week high of $292.76 and at a premium of 29.5% to its 52-week low of $124.46.

NVIDIA stock has been on an uptrend despite trade war fears and the crypto bubble burst. Notably, institutional investors have also increased their holdings in NVIDIA. The stock will likely rise if the two economies reach a trade truce soon.

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Growth projections

Analysts expect NVIDIA to post revenue growth in fiscal 2021. The company’s sales will likely increase 19.8% YoY (year-over-year) in fiscal 2021 compared to an anticipated decline of 8.0% for fiscal 2020 ending in January. Analysts also expect the company’s earnings to increase 31.4% YoY in fiscal 2021 compared to an anticipated decline of 18.8% YoY in fiscal 2020.

NVIDIA’s technical levels

Based on NVIDIA’s closing price on Wednesday, the stock was trading 0.9% above its 20-day moving average of $159.82, 1.1% below its 50-day moving average of $163.07, and 1.5% below its 100-day moving average of $163.74.

NVIDIA’s 14-day RSI (relative strength index) score is 48.7, which indicates that investors are neutral on the stock. An RSI level of above 70 means that a stock is in “overbought” territory. An RSI reading below 30 means that a stock is in “oversold” territory.

On Wednesday, NVIDIA stock closed near its Bollinger Band mid-range level of $159.69. The value shows that the stock isn’t oversold or overbought.

Analysts’ recommendations  

Overall, analysts favor a “buy” rating on NVIDIA. Among the 40 analysts that cover the stock, 26 recommend a “buy,” 12 recommend a “hold,” and two recommend a “sell.” Currently, analysts have a 12-month target price of $184.25 on the stock. On Wednesday, the stock was trading at a discount of 12.5% to analysts’ 12-month target price. The median target price is $190.00.

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