Graphics chip company NVIDIA Corporation (NASDAQ:NVDA) posted incredible gains in 2016 when prices shot from $30 to over $100 in the space of just one year. Robust demand for Nvidia’s core gaming processor business, clever investment in the deep learning space and consistently impressive earnings results all propelled the stock’s extreme growth. For 2017, Nvidia boasts a key position in two of the hottest technologies right now- driverless cars and artificial intelligence (AI).
Nonetheless, investors are wondering: can the stock soar even higher or is there a danger of a price pullback? Indeed, prices fell back slightly last month from $120 to $97 following a couple of bearish analyst reports that warned of a gaming slowdown and cautioned that the market should not ignore the danger of a stock selling at a valuation of more than 39 times earnings.
We turned to our score system to find out what the experts are saying. TipRanks score system combines six different elements of the market into one simple score. The score is calculated from expert sentiment, news and crowd wisdom and other data points on Nvidia usually only available to hedge funds. The result: investors can make a clear, data-based, decision on whether NVDA is a buy or a sell stock.
Wall Street Analysts
With a score of 6.8 and an analyst consensus rating of moderate buy, analysts are still predicting further upside potential for Nvidia despite its astronomical gains last year. The average analyst 12-month price target translates into an 8% upside from the current share price of $108. In fact, TipRanks reveals that the last seven ratings published on the stock have all been buy ratings. B. Riley analyst Craig Ellis is one of the latest bulls to reiterate his buy rating. His price target of $135 represents a 24% upside potential.
According to Ellis, there have been meaningful recent Auto, Data Center, and Gaming platform developments for Nvidia which have been overshadowed by Intel’s $15 billion Mobileye acquisition, with Nvidia’s Auto partnership with automotive supplier Bosch gaining strength. The Xavier-based autopilot module has now been confirmed for a 2018 release. “We believe Xavier’s power and performance could lead the industry for years to come,” writes Ellis, concluding “We believe stellar growth justifies the high multiple.”
TipRanks’ unique algorithms extract relevant stock opinions from thousands of financial blogs- resulting in Nvidia’s fairly positive score of 7/10. In fact, an impressive 78% of bloggers are bullish on the stock due to factors such as
However, the more bearish bloggers look at what would happen to Nvidia if, in a worst-case scenario, 1) AMD’s Vega GPU takes Nvidia’s market share 2) Intel’s acquisition of Mobileye leads to increasing competition in the driverless car space, and 3) Intel’s priority on AI development sees its capabilities overtake those of Nvidia.
TipRanks has the ability to differentiate between informative and uninformative insider transactions in order to find the most compelling investing opportunities. Informative transactions are deliberately made by insiders, and can reflect insider knowledge of a company’s real outlook. Only seven days ago, NVDA director Brooke Seawell made an informative sale of $3.6 million of Nvidia stock. The sale followed three informative buy transactions by Nvidia’s five-star President and CEO Jen Hsun Huang. Huang’s total Nvidia holding is worth about $3 billion.
Hedge Fund Managers
Hedge fund managers file 13F forms with the SEC every quarter. TipRanks tracks these filings to reveal the latest hedge fund transactions and the overall hedge fund sentiment on specific stocks. For Nvidia, which has a fairly neutral score of 5.1/10, TipRanks shows that hedge funds increased their NVDA holdings in the last quarter by 14,500 shares. Notably, hedge fund guru Philippe Laffont initiated a new holding in the stock with a reported value of $459 million. Laffont managed the $8.44 billion Coatue Management fund.
However other top hedge fund managers such as Ray Dalio, George Soros and Andrew Law all sold out their Nvidia holdings completely.
The news sentiment score for Nvidia is ridiculously high at 9.5 out of 10. This is backed up by the TipRanks’ new news page which shows that the news on Nvidia is almost 95% bullish, giving it an even higher bullish/ bearish ratio than the sector average of 79:21.
What does the positive news cover? By looking at keywords extracted from the articles we can immediately see that the news is covering artificial intelligence and self-driving car technology. Checking the news list reveals that on March 24 Nvidia announced that Chinese internet giant Tencent will use Nvidia Tesla GPU accelerators through its cloud service, primarily “Tencent Cloud GPU offerings with NVIDIA’s deep learning platform will help companies in China rapidly integrate AI capabilities into their products and services,” said Sam Xie, VP of Tencent Cloud.
Tracking the 120,000 active TipRanks portfolios on the award-winning Smart Portfolio platform shows how Nvidia is a very popular stock for all TipRanks users. We discovered that the average portfolios and the best-performing TipRanks portfolios i.e. which is based on portfolios that generate the highest return, both hold Nvidia as their fifth biggest stock. In fact, Nvidia is the third biggest tech stock for the best-performing portfolio and the average TipRanks portfolio which explains the high score of 8.4/10.