Why the Market Dipped But Nvidia (NVDA) Gained Today
In the latest trading session, Nvidia (NVDA) closed at $228.86, marking a +1.68% move from the previous day. The stock's change was more than the S&P 500's daily loss of 0.77%. Meanwhile, the Dow experienced a drop of 0.67%, and the technology-dominated Nasdaq saw a decrease of 0.92%.
Shares of the maker of graphics chips for gaming and artificial intelligence have appreciated by 3.46% over the course of the past month, underperforming the Computer and Technology sector's gain of 6.26%, and outperforming the S&P 500's gain of 0.96%.
Analysts and investors alike will be keeping a close eye on the performance of Nvidia in its upcoming earnings disclosure. The company's upcoming EPS is projected at $2.47, signifying a 90.00% increase compared to the same quarter of the previous year. Simultaneously, our latest consensus estimate expects the revenue to be $109.02 billion, showing a 91.24% escalation compared to the year-ago quarter.
For the full year, the Zacks Consensus Estimates are projecting earnings of $9.25 per share and revenue of $406.05 billion, which would represent changes of +93.92% and +88.04%, respectively, from the prior year.
Investors should also take note of any recent adjustments to analyst estimates for Nvidia. Recent revisions tend to reflect the latest near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.
Based on our research, we believe these estimate revisions are directly related to near-term stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.
The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 4.73% upward. Right now, Nvidia possesses a Zacks Rank of #1 (Strong Buy).
Valuation is also important, so investors should note that Nvidia has a Forward P/E ratio of 24.34 right now. This represents a discount compared to its industry average Forward P/E of 38.49.
It is also worth noting that NVDA currently has a PEG ratio of 1.74. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The average PEG ratio for the Semiconductor - General industry stood at 1.74 at the close of the market yesterday.
The Semiconductor - General industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 49, placing it within the top 20% of over 250 industries.
The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
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This article originally published on Zacks Investment Research (zacks.com).
