Shares of Nvidia NVDA surged more than 2% to hit a new all-time intraday trading high on Monday. This is clearly good news for investors, but what exactly caused today's gains? Let's take a closer look.
Analysts at Jefferies think that Steven Spielberg's upcoming futuristic action blockbuster Ready Player One has the potential to boost the stock price of companies like Nvidia and rival AMD AMD .
Analysts claim that the premise of Spielberg's latest film, which features a world where humans spend a large amount of their time living through virtual reality-based avatars, will lift sales of the company's high-performance chips, known as graphics processing units (GPUs).
"We believe that the movie will drive sales of VR headsets that require high-performance GPUs from NVDA and AMD," analysts wrote .
Jefferies analyst Mark Lipacis currently has a buy rating for Nvidia and sees its shares surging to $300 over the next year. This climb would mark more than a 20% jump from Friday's closing price of $245.33 per share.
"A lot of the demand for increased compute cycles is becoming parallel in nature, like neural networking, gaming, virtual reality and blockchain/cryptocurrency mining," he added.
For many investors and consumers, virtual reality seems far off, but the technology has come a long way in a relatively short period of time. Facebook's FB Oculus headsets and Sony's SNE PlayStation VR both currently offer affordable virtual-reality tech, and a slew of other companies have joined the market recently.
Ready Player One , which is geared towards kids, is set to be released on March 29. With that said, let's take a look at a few more of Nvidia's current fundamentals to help gauge whether or not the stock looks poised to continue its current hot streak.
Nvidia reported record full-year revenues of $9.71 billion last month, which marked a 41% jump from the year-ago period. Our current Zacks Consensus Estimates are now calling for the computer chip giant's first quarter fiscal 2019 sales to soar 50%. Nvidia's bottom line is also expected to surge over 76% to hit $1.50 per share.
Looking at the company's current full year, Nvidia is projected to see both its top and bottom line jump by over 28%. Investors might also be happy to note that the company has beat or matched earnings estimates in 11 straight quarters. This includes posting an average earnings surprise of nearly 41% in the trailing four periods.
Nvidia has also recently earned a large number of estimate revisions for its current quarter, next quarter, current year, and following year earnings, with 100% agreement to the upside.
The company is also currently trading at 39.43x forward earnings. This might seem like a rather high figure for some value investors, but Nvidia's median P/E was roughly 47.5 over the last two quarters. Investors have clearly been willing to pay a premium for Nvidia stock recently. But investors should also note that at its current P/E, Nvidia is relatively cheap compared to where it has been recently.
On top of all of this, Nvidia is currently a Zacks Rank #1 (Strong Buy) and sports a "B" grade for Growth in our Style Scores system.
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