Nvidia Stock News and Forecast: NVDA set for more losses as valuation looks too high
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UPGRADE- Nvidia stock closes nearly 3% lower on Monday.
- The semiconductor builder fell over 9% on Friday in a market sell-off.
- NVDA stock is set for more losses as the chart looks bearish.
NVDA stock fell again on Monday and once more underperformed the market as most equities began to stabilize on Monday. Nvidia, though, has remained under pressure since its earnings release. The stock fell 9% on Friday as equities turned lower and high valuation stocks were punished.
Also read: Nvidia Stock Deep Dive Analysis: NVDA price target at $205 with strong revenue growth
NVDA stock news
Nvidia earnings last Thursday were a mixed bag with lower guidance for gaming and PC markets being overshadowed by some bullish comments on its data center potential. Analysts were mixed after the event, but mostly bullish. However, another negative read-across from Marvell was enough to sink hopes, and then Fed's Powell stuck the knife into high-growth tech stocks on Friday.
So where are we left after all that? Certainly slowing growth is a disappointment, and we are less than sure about the whole data center growth story. Data centers look set to be replaced by the cloud as a more flexible and cost-effective storage solution. Gaming is also due to a cyclical deceleration, and NVDA is overly exposed here and has used the conference call to try and guide lower in this area. Some headwinds are apparent, for sure.
Perhaps the overriding headwind is simply the high multiple. NVDA stock trades on a trailing P/E of 36 and a forward P/E of 46. When growth stalls and interest rates rise, these stocks are always the first ones to be targeted. Investors will look for lower multiples. That means either a lower P or a higher E. Nvidia has more or less guided for a lower E, so ergo we need a lower P. Simplistic perhaps, but right now valuations and macro are what are driving markets. Revenue growth has turned negative last quarter at $8,288 versus now $6,704. Gross profit $5,431 to $3,036. Slowing growth will mean a lower multiple and valuation.
NVDA stock forecast
The key question is how much of this Nvidia slowing growth is already priced it. The easy part is to say, yes, growth is slowing and the company will not be as profitable going forward. Markets are forward discounting though, so how much is priced in? Based on a simple P/E metric above, not enough.
NVDA stock has broken below the 50-day moving average, so is below the major 50 and 200-day averages. All trends are pointing lower. The long-term consolidation zone of around $140 looks like the obvious target. NVDA was a massive pandemic stock, and most tech stocks have already retraced to pandemic levels. The key support is low at $140.55. If NVDA share price can hold that and put in a higher low, then there is some hope for bulls. The key resistance zone is $200 and $206.
NVDA stock weekly
- Nvidia stock closes nearly 3% lower on Monday.
- The semiconductor builder fell over 9% on Friday in a market sell-off.
- NVDA stock is set for more losses as the chart looks bearish.
NVDA stock fell again on Monday and once more underperformed the market as most equities began to stabilize on Monday. Nvidia, though, has remained under pressure since its earnings release. The stock fell 9% on Friday as equities turned lower and high valuation stocks were punished.
Also read: Nvidia Stock Deep Dive Analysis: NVDA price target at $205 with strong revenue growth
NVDA stock news
Nvidia earnings last Thursday were a mixed bag with lower guidance for gaming and PC markets being overshadowed by some bullish comments on its data center potential. Analysts were mixed after the event, but mostly bullish. However, another negative read-across from Marvell was enough to sink hopes, and then Fed's Powell stuck the knife into high-growth tech stocks on Friday.
So where are we left after all that? Certainly slowing growth is a disappointment, and we are less than sure about the whole data center growth story. Data centers look set to be replaced by the cloud as a more flexible and cost-effective storage solution. Gaming is also due to a cyclical deceleration, and NVDA is overly exposed here and has used the conference call to try and guide lower in this area. Some headwinds are apparent, for sure.
Perhaps the overriding headwind is simply the high multiple. NVDA stock trades on a trailing P/E of 36 and a forward P/E of 46. When growth stalls and interest rates rise, these stocks are always the first ones to be targeted. Investors will look for lower multiples. That means either a lower P or a higher E. Nvidia has more or less guided for a lower E, so ergo we need a lower P. Simplistic perhaps, but right now valuations and macro are what are driving markets. Revenue growth has turned negative last quarter at $8,288 versus now $6,704. Gross profit $5,431 to $3,036. Slowing growth will mean a lower multiple and valuation.
NVDA stock forecast
The key question is how much of this Nvidia slowing growth is already priced it. The easy part is to say, yes, growth is slowing and the company will not be as profitable going forward. Markets are forward discounting though, so how much is priced in? Based on a simple P/E metric above, not enough.
NVDA stock has broken below the 50-day moving average, so is below the major 50 and 200-day averages. All trends are pointing lower. The long-term consolidation zone of around $140 looks like the obvious target. NVDA was a massive pandemic stock, and most tech stocks have already retraced to pandemic levels. The key support is low at $140.55. If NVDA share price can hold that and put in a higher low, then there is some hope for bulls. The key resistance zone is $200 and $206.
NVDA stock weekly
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