Nasdaq NVDA Nvidia

U.S. stocks looked set to open 1% higher on Tuesday as technology firms bounced back on easing concerns around the Omicron variant, while Intel jumped after plans to take its self-driving car unit public.

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Nvidia (NVDA) stock is on fire, rising about 130% on a year-to-date basis and outpacing the Nasdaq composite index. This remarkable growth in Nvidia stock reflects strong demand trends with continued strength in its data center and gaming segments. 

While Nvidia is benefitting from strong demand, its stock has witnessed a 10% decline in the last five trading days. The recent weakness stems from concerns that Nvidia’s ARM deal could fail. It’s worth noting that regulators in the U.S., U.K., and China have expressed concerns over competitive issues.

The U.S. Federal Trade Commission recently announced that it has sued to block Nvidia’s ARM acquisition.

Read more: Nvidia and Arm Merger Deal Blocked By FTC on Competition Grounds

Now What?

Even with the absence of the ARM deal, Nvidia could continue to gain from the ongoing strength in its data center and gaming divisions. 

Highlighting the momentum in Nvidia’s business segments, Vijay Rakesh of Mizuho Securities raised his price target to $335 from $235. 

The analyst stated that the DC (data center)/Gaming/Pro-Vis (Professional Visualization) markets are growing fast, and Nvidia’s dominant positioning in the AI (artificial intelligence) is helping to build “a deep competitive moat.” Rakesh maintained a Buy rating on Nvidia stock.

Similarly bullish on Nvidia is Rajvindra Gill of Needham. Gill expects Nvidia to be the “first $1T (trillion) semiconductor company.” The analyst’s bullish outlook reflects Nvidia’s “long-term growth, with the new Omniverse $100B software TAM (total addressable market), coupled with the $100B hardware data center TAM, and the company’s proven, strong FCF generation potential.” 

Gill increased his price target to $400 from $245. 

Stock Rating

Alongside Rakesh and Gill, most Wall Street analysts have a bullish view on Nvidia stock. On TipRanks, Nvidia sports a Strong Buy consensus rating based on 24 Buys and 2 Holds. 

TipRanks’ Stock Investors tool indicates that investors have a very positive outlook on Nvidia. The data shows that 4.0% of investors holding portfolios on TipRanks have increased their exposure to Nvidia stock in the last 30 days.

See Top Smart Score stocks >>

The average Nvidia price target of $360.17 implies 19.9% upside potential to current levels.

Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

Futures tracking the Nasdaq 100 index jumped on Tuesday as technology stocks rebounded with easing concerns about the Omicron variant, while shares in chip giant Intel rose following plans to take its self-driving-car unit public.

The U.S. Federal Trade Commission (FTC) on Monday argued that competition in the nascent markets for chips in self-driving cars and a new category of networking chips could be hurt if Nvidia Corp carries out its $80 billion purchase of Arm Ltd.

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Wall Street's major averages closed higher on Monday with economically sensitive sectors and travel-related stocks advancing solidly as investors were encouraged by some optimistic comments from a top U.S. official on the latest COVID-19 variant.

Nvidia (NVDA) is an American multinational company known for integrated circuit manufacturing. I am bullish on the stock.

The company's facing a significant legal headwind regarding its ARM acquisition, which, if completed would add considerable value to the firm via synergies.

Regardless of whether the deal closes or not, Nvidia stock's prospects remain bright. (See Analysts’ Top Stocks on TipRanks)

Momentum

Nvidia's a good momentum play at the moment, with the stock trading above its 50-, 100-, and 200-day moving averages. The stock's trading below its 10-day moving average, as the general market has dipped on the news of the Omicron variant.

This might be a good "buy-the-dip" play, as the RSI has drawn down to below 70.

Earnings & Outlook

Nvidia's Q3 2022 revenue grew by 50.1% year-over-year, beating analyst estimates by $290 million.

Breaking it down by segment, Gaming came in strong across the board with revenue up by 42% year-over-year as RTX and GPU sales formed a cohesive partnership to drive earnings forward. Furthermore, Nvidia's Data Center revenue also reached record numbers with 50% year-over-year growth as a result of strong demand by hyperscale customers for its A100 Tensor core GPU.

Looking ahead, the firm's management expects a strong year-end with Q 4 revenue projected to come in at $7.4 billion and gross margins between 65.3% to 67%. The chipmaker's also sitting with a net deferred tax asset of $745 million, which could be exercised in subsequent earnings periods.

What about the ARM Acquisition?

According to Citigroup (C), Nvidia's odds of acquiring ARM group from Softbank have been slashed from 30% to 5%.

The proposed deal was worth $40 billion, which is more than 2x Nvidia's cash and short-term investment holdings. Considering Nvidia already holds a leverage ratio of 49.1%, it will most likely have to issue additional shares to complete the takeover, subsequently diluting shareholder value.

It's unclear whether the deal is going to pan out or not. ARM would add significant value to Nvidia's upstream, and cost synergies would be the result. However, the deal could be strenuous on the balance sheet, and the stock would most likely lose short-term value.

If the acquisition fails, Nvidia stock should sustain its momentum throughout 2022 due to balance sheet factors.

Wall Street's Take

Wall Street firms generally think the stock is a Strong Buy. Out of 26 ratings by analysts, 24 have been Buys along with two Holds. The average Nvidia price target is $359.75, which presents 19.8% upside potential.

Concluding Thoughts

Nvidia stock is set for upside regardless of the outcome of the ARM acquisition. The company's prospects remain bright after smashing earnings estimates once again.

Disclosure: At the time of publication, Steve Gray Booyens did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

Wall Street's major averages closed higher on Monday with economically sensitive sectors and travel-related stocks soaring as investors were encouraged by some optimistic comments from a top U.S. official on the latest COVID-19 variant.

The Dow led Wall Street shares higher on Monday, as economy-linked banks and energy stocks charged back and fear about the Omicron variant eased, even as investors braced for another roller-coaster ride like last week's.

The Dow rallied over 1% on Monday as economy-linked banks and energy stocks roared back after sharp declines in the previous week, while Nasdaq struggled to keep pace as Nvidia dragged down chipmakers.

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The Dow jumped over 1% on Monday as economy-linked banks and energy stocks came roaring back after sharp declines in the previous week, while technology stocks struggled to keep pace as Nvidia dragged down chipmakers.

In early trading on Monday, shares of American Airlines Group topped the list of the day's best performing components of the S&P 500 index, trading up 6.5%. Year to date, American Airlines Group registers a 12.2% gain.

The Dow and the S&P 500 index were set to open higher on Monday after declining sharply last week on Omicron and taper fears, with investors swapping technology and growth-heavy shares with banks, energy and economy-linked stocks.

The Nasdaq index was set for a lower open on Monday as mega-cap technology firms slipped and shares of Nvidia led declines among major chipmakers, while Dow futures were supported by a rise in economy-sensitive stocks.

EU antitrust regulators have temporarily halted their investigation into Nvidia's bid for British chip designer ARM, the largest ever chip deal, as they await more information, according to a European Commission filing.

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Japan's Nikkei share average ended lower on Monday, dragged down by a sharp decline in SoftBank Group, but optimism that the Omicron variant might not have as much impact on the economy as feared helped the index pare some of early losses.