NVIDIA Corporation (NVDA) Stock Is At All Time High, Should You Buy?

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Can NVIDIA Corporation (NASDAQ:NVDA) stock continue its remarkable run or will there be a correction?

– Nvidia stock has gained around 30% in the last ten days.

– RSI indicates that the stock is overbought.

– Will there be a correction?


Adam Ziaja / Shutterstock.com

Adam Ziaja / Shutterstock.com

NVIDIA Corporation (NASDAQ:NVDA) stock is on a roll. The shares of the Santa Clara, California-based graphics card maker are up more than 250% for the year. Nvidia stock gained more than 7% in yesterday’s trade, that too on a strong volume (almost double the average volume), indicating that the stock still has strong momentum. Yesterday marked the tenth consecutive day of gains, with the stock gaining around 30% in this period. On the other hand, the recent rally has also sent the RSI into the overbought zone, with RSI coming in at 84.4. So should you wait for a correction? Or get into the NVDA stock before it climbs further?

Traders Eye Strong Year End Close

Traders have been playing along with NVIDIA stock. After all, “the trend is your friend”. In the past couple of weeks, call buying has outpaced put buying. A Schaeffer’s research analysis (1) of options activity of Nvidia indicates that many traders believe the stock will close 2016 on a strong note.

…Call volume is so far outpacing put volume, and running at two times the expected intraday pace. The most popular option is the weekly 12/30 115-strike call, and all signs point to buy-to-open activity. Since these options expire at the end of the week, traders are betting on NVDA ending the year on a strong note.

Fundamentals Remain Strong And Analysts Are Bullish

NVIDIA Corporation (NASDAQ:NVDA) is firing on all cylinders. Whether it is datacenter or automotive, the company has shown strong growth. In Q3, Nvidia reported a huge beat on both earnings and revenues. The revenue came in at $2 billion, a 54% YoY growth. And the company still has strong growth drivers, from AI to VR to gaming. AI market for HPC vendors is likely to grow from $300 million to $16 billion in 2025. Even if Nvidia manages to capture a small share, it will have a huge impact on its revenue. Another growth driver is the autonomous car market. Nvidia is partnering with more than 20 automakers and has entered into an agreement with Tesla Motors Inc (NASDAQ:TSLA). The Model S, the Model X and upcoming Model 3, will feature a new AutoPilot system powered by the NVIDIA DRIVE PX 2 platform. The company expects driver-less car market to be a $6-$12 billion opportunity. (Also Read: The Next Billion Dollar Opportunity For NVIDIA Corporation).

The strong fundamentals and bullish outlook have resulted in multiple upgrades for Nvidia stock. The company has recently earned price target upgrades from CITI, Jefferies, Evercore ISI and Loop Capital. The latest to join the bandwagon was Goldman Sachs which raised the price target from $92 to $129, implying more than 10% upside even after yesterday’s rally, and added the stock to its “conviction buy” list. According to Goldman Sachs, because of trends in gaming, VR, machine learning, and automotive, electronicsthe company remains a “unique growth story in semis”. Goldman increased NVIDIA’s 2018 and 2019 EPS targets by 18% and 33%. To quote (2) Goldman analyst Toshiya Hari:

“We continue to view NVDA as a unique growth story in semis, levered to positive secular trends in gaming, VR (virtual reality), AI (artificial intelligence)/ML (machine learning) and automotive. Note our revised FY18/19 EPS estimates are 26%/57% above the Street, respectively, and we expect estimate revisions to serve as a positive catalyst for the stock in the coming quarters,”

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