UBS raises NVIDIA’s price target to $150: Can it reach there?

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On July 8th, 2024, NVIDIA Corp (NASDAQ: NVDA) received a significant boost from UBS, which raised its price target from $120 to $150 while reaffirming its ‘Buy’ rating on the stock. This adjustment comes as NVIDIA’s upcoming Blackwell product line shows robust demand even before the launch.

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The upgrade from UBS was influenced by detailed market checks indicating that NVIDIA’s upcoming products, including the NVL72 and NVL36 GPUs, are poised for significant adoption.

Analyst Timothy Arcuri predicts that NVIDIA could achieve earnings of approximately $5 per share by 2025, a substantial uplift due to larger-than-expected order volumes from major hyperscalers solidifying their budgets.

In contrast, other analysts have expressed caution. Notably, New Street Research issued a rare downgrade just three days prior, shifting their stance to ‘Neutral’ from ‘Buy’ and setting a target price of $135.

This was predicated on the view that NVIDIA was fully valued unless further bullish scenarios post-2025 materialize, which they deemed unlikely.

The broader analyst community remains largely positive, with aggregated data showing that out of 54 Wall Street analysts, the majority rate NVIDIA as a ‘Strong Buy’ or ‘Buy’.

This consensus reflects confidence in NVIDIA’s ongoing and future market position, especially as it leads the charge in AI and gaming technologies.

Fundamental business performance and earnings

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NVIDIA continues to thrive fundamentally, dominating the AI and GPU markets. Recent earnings have exceeded expectations, with significant revenue growth driven by its data centers and AI developments.

The anticipation around its new AI Blackwell chip family further underscores its strong position.

This has led to the stock appreciating 155% year-to-date. CEO Jensen Huang took advantage of this spike recently by selling 1.3 million shares, realizing approximately $169 million. Such moves often draw market attention and speculation about insider perspectives on stock valuation and future performance.

However, despite the high growth, some analysts have express caution, suggesting the stock’s tremendous rise may face challenges as market dynamics evolve, especially with emerging competition from companies like AMD and Intel in the AI accelerator space.

From a valuation perspective, NVIDIA trades at a forward P/E ratio of 71.65, significantly above the sector median of 30.31. This premium reflects high growth expectations, particularly with NVIDIA’s recent developments and the upcoming launch of the Blackwell series.

The anticipated financials for FY 2025 suggest earnings per share (EPS) on a GAAP basis of $3.34, up from $2.91, and an adjusted EPS of $3.53, up from $3.10.

It’s time now to shift our focus to the charts. This will help us understand whether the current investor optimism, as mirrored in the stock’s price movement and analyst ratings, aligns with the technical indicators of NVIDIA’s stock trajectory. Let’s delve into what the charts have to say about reaching that ambitious $150 price target set by UBS.

Bullish momentum prevails

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NVIDIA’s stock has seen an unprecedented surge this year topping above $140 on June 20. Though the stock has fallen since then, it has been consolidating in a small $120-$130 range, which is a good sign for the bulls.

NVDA stock by TradingView

A period of consolidation means the stock could be taking a breather to again resume its upward trajectory. Investors who want to purchase the stock can do so at current levels with a trailing stop loss at its 50-day moving average. If the upward momentum resumes we can see the stock making new all-time highs soon.

Traders who are bearish on the stock must not stock at current levels but wait for it to fall below its recent swing low at $118. If the stock falls below that level then they can short stock with a stop loss above $132. If the bearish momentum intensifies then the stock can find support near 61.8% Fibonacci retracement at $101.98 where one can book profits.