Why NVIDIA?
There is still a shortage of chips in the world and so the actions of the biggest players on the market are being closely monitored. One of them is undoubtedly NVIDIA (NVDA), which recorded extraordinary gains last week, rising by more than 25% to a four-week high.
The semiconductor industry is being held back primarily by ongoing supply chain issues. There are major problems with the supply of semiconductor materials, where the current geopolitical situation is not helping the situation at all. While the Russian invasion is making chip materials significantly more unavailable, the Chinese obsession with Taiwan is disrupting the chip manufacturing side for a change. This small country dominates the global foundry market and produces chips for such giants as NVIDIA, APPLE and even QUALCOMM.
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Cowen analyst Matthew Ramsay discussed the company’s long-term growth last week. He believes that after NVIDIA’s transformation from a GPU hardware company to an accelerated computing HW/SW platform provider. And given the correspondingly more attractive valuation, NVIDIA is a new top pick in this stock segment.
How high can NVDA go?
Target prices currently range from a low of $210 to a high of $400, while the stock closed Friday’s session approximately $75 below the median target price of $350. Targets and ratings have barely moved in the past three months as Omicron and Ukraine have made it difficult for the stock to regain its long-term leadership role.
NVIDIA settled near 150 in September 2020 and carved out a narrow trading range before breaking out in May 2021, hitting an all-time high of 346.47 in November. It broke out of a small head-and-shoulders top in January and entered a correction that reached its 200-day moving average a few weeks later. For the past two months, the stock has tested this support level, lifting weekly relative strength indicators into a buying cycle.
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