Should Investors Consider Buying Nvidia Stock?

On Monday, Nvidia (NASDAQ:NVDA) stock rose 2.35% and closed at $276.43. Based on the last closing price, the company has a market cap of $169.2 billion. The stock price has risen 1.15% in the trailing five-day period, while it has risen 76.7% in the trailing 12-month period.

Currently, Nvidia stock is trading 12.6% below its 52-week high of $316.32 on February 20. The stock was also trading 108.5% above its 52-week low of $132.60 on June 3, 2019. On a YTD (year-to-date) basis, the stock has risen by 17.5% as of Monday. In comparison, the S&P 500 Index and the Dow Jones Industrial Average Index have lost 4.4% and 6.4% YTD, respectively.

Analysts’ recommendations for Nvidia stock

According to Reuters, most of the analysts tracking Nvidia stock are bullish. Among the 41 analysts, 31 recommend a “buy”—up from 29 in the last month. Seven analysts recommend a “hold”—down from ten in the previous month. The remaining three analysts recommend a “sell”—up from two in the previous month. Analysts have an average target price of $303.15 on Nvidia. The target price implies a return of 9.7% based on the closing price of $276.43 on Monday. The consensus target price for the stock has risen from $248.35 in February—a rise of 22.1%. The lowest target price estimate is $140, while the highest is $360.00.

Last month, Instinet decreased its target price from $235 to $230 on Nvidia stock. According to a MarketWatch report, Instinet analyst David Wong said, “We think the economic dislocations resulting from the COVID-19 outbreak pose risk to demand in most electronic end markets, though we believe the end markets associated with consumer purchases might have the most potential downside.” The report also said, “In addition, we think that many investors continue to view Nvidia as the leader in autonomous driving chips, but over the last several quarters, Intel’s Mobileye sales have pulled meaningfully above Nvidia’s automotive sales.”

However, Bernstein analyst Stacy Rasgon raised its target price from $300 to $360. Morgan Stanley, UBS, Craig-Hallum, Deutsche Bank, Raymond James, BMO, and Suntrust Robinson also increased their target prices on the stock.

Micron Technology (NASDAQ:MU), Intel (NASDAQ:INTC), and Advanced Micro Devices (NYSE:AMD) have average broker target prices of $67.65, $65.98, and $49.00, respectively. These figures imply returns of 23.9%, 20.9%, and 3.2%, respectively, over the next 12 months.

Financial performance in Q4

Nvidia’s net revenue rose 40.8% YoY (year-over-year) to $3.11 billion in the fourth quarter of fiscal 2020 (ended January 2020). Analysts expected revenue of $2.97 billion. The company’s data center segment reported revenue of $968 million—a rise of 42.6% YoY. Meanwhile, the company’s gaming segment reported revenue of $1.49 billion—a rise of 56.3% YoY. Nvidia’s adjusted EPS was $1.89 in the fourth quarter of fiscal 2020, which was better than $0.80 in the fourth quarter of fiscal 2019. However, analysts expected an adjusted EPS of $1.67.

Nvidia expects to report net revenue of $3.00 billion (plus or minus 2%) in the first quarter of fiscal 2021. Read Should You Buy Nvidia Stock after Its Q4 Results? to learn more.

Nvidia’s stock returns

On Monday, Nvidia stock was trading 1.2% above its 20-day moving average of $273.08. Meanwhile, the stock is trading 8.5% above its 50-day moving average of $254.78 and 19.7% above its 100-day moving average of $230.87. The stock’s 14-day relative strength index score of 54 shows that it isn’t oversold or overbought.

Nvidia has an upper Bollinger Band level of $311.18. The company’s middle Bollinger Band level is $271.21, while its lower Bollinger Band level is $231.24. On Monday, Nvidia stock closed near its middle Bollinger Band level, which also suggests that the stock is neutral.

Nvidia’s dividend yield was 0.23% on Monday. While AMD and Micron don’t pay equity dividends, Intel’s dividend yield was 2.27% on the same day.

Nvidia stock is trending downward in today’s trading session. The stock fell by about 0.97% at 9:41 AM ET. Read Is There More Upside to Nvidia’s Stock Price? and NVIDIA: The Way It Is Meant To Be Played to learn more. Also, read Nvidia and Mellanox Deal Wins EU Approval.