During the main trading session on Thursday, NVIDIA Corporation (NASDAQ: NVDA) shares rose 4.76% and added another 1.12% in the postmarket. The reason was the update of the target to the maximum value.
NVIDIA Corporation (NASDAQ: NVDA) stock added $33.88 to finish the last trading session at $746.29. The stock recorded a trading volume of 20.24 million shares, below the average daily trading volume published for the last 50 days of 9.35 million shares. Over the last month, NVIDIA Corporation’s shares have climbed 33.12%; however, they retreated 7.07% in the last five days. The stock price has surged 46.65% over the past three months and 102.01 % over the past year. Also, the stock has a price-to-earnings ratio of 88.44. Moreover, its price to cash flow ratio stands at 88.77, while its price to sales ratio is 23.60.
Mark Lipasis, an analyst for Jefferies, spoke to NVIDIA’s CFO before increasing his investment target to $ 854 from $ 740, the highest of all Wall Street analysts. As Lipasis sees it, investors are underestimating the company’s capability to develop new data center software. When NVIDIA reports new revenues, opinions may change. Furthermore, the analyst said he expects to close the deal with ARM in the first quarter of 2022. This will enable NVIDIA to expand ARM technology into new markets, including data centers, automobiles, and IoT. According to Lipasis, although the software is mostly embedded in hardware sales today, enterprise (artificial intelligence) software in the data center can be licensed, similar to how VMware licenses its systems software.
In the event of the NVIDIA deal not moving forward, Qualcomm has stated a desire to buy ARM. In addition, the NVIDIA software can have a better profit margin than the hardware. Consequently, if this part of the business contributes to improved profitability, investors are more likely to purchase these high-value shares.
Over the past several months, NVIDIA Corporation (NASDAQ: NVDA) shares have experienced a steep uptrend, fuelled by higher analyst targets, positive reports, technological superiority, and continued development. In addition, the company announced its intention to split the shares. Based on the daily and weekly RSI, the securities seem overbought. The trend is common among growth stocks and nothing to be surprised about. Based on a large amount of optimistic news, short-term growth will probably continue.
Nevertheless, it is important to remember that a correction can be made at any time. Joining the upward trend at this point would be unwise due to the high risk of decline due to possible profit taking by other investors. Therefore, the outlook for the long run is moderately positive.