NVIDIA Tests All-Time High After Rosy Revenue Outlook

Shares in NVIDIA Corporation (NVDA) gained over 5% Monday after the Santa Clara chipmaker said that its sales for the current quarter sit ahead of previous forecasts. The upward revision comes after its total fourth quarter (Q4) revenues grew by 61%.

Although management did not provide a specific figure, it now expects Q1 revenue to come in above its earlier estimate of between $5.19- and $5.41 billion. “While our fiscal 2022 first quarter is not yet complete, Q1 total revenue is tracking above the $5.30 billion outlook provided during our fiscal year-end earnings call,” Nvidia’s CFO Colette Kress said in a statement cited by CNBC. Meanwhile, analysts expect sales during the period to reach $5.32 billion.

Earlier in the day, Chief Executive Jensen Huang told investors at the annual GTC developers conference that the company was launching its first data-center CPU that uses artificial intelligence. The new chip that powers computer servers is likely to intensify competition with key rival Intel Corp. (INTC), which controls over 90% of the CPU data-center market.

Through Monday’s close, NVIDIA stock has a market value of $377 billion, offers a small 0.11% dividend yield, and trades 131.36% higher over the past twelve months. By comparison, the industry’s largest exchange-traded fund (ETF) – the iShares PHLX Semiconductor ETF (SOXX) – has gained 103.13% over the same period.

Wall Street View

In late February, Raymond James analyst Chris Caso raised the investment firm’s price target on Nvidia to $700 from $600 while reiterating his Outperform rating. Caso pointed to “strong” revenue in the company’s gaming segment for the upgrade.

Coverage elsewhere on Wall Street also remains overwhelmingly favorable. The stock receives 26 ‘Buy’ ratings, 5 ‘Overweight’ ratings, 5 ‘Hold’ ratings, 1 ‘Underweight’ rating, and 1 ‘Sell’ rating. Twelve-month price targets range from $380 to $800, with the median target pegged at $660. Look for additional upgrades in the coming weeks as analysts revise revenue forecasts.

Technical Outlook and Trading Tactics

NVIDIA shares have oscillated within a 130-point range since early September. More recently, the price has rallied from the closely-watched 200-day simple moving average (SMA), with the stock closing just below its all-time high (ATH) at $614.90 in Monday’s trading session. Yesterday’s move on above-average volume indicates the involvement of larger market players, which may see the stock breakout into price discovery in the near future.

Active traders who position for such a move should use a fast period moving average as a trailing stop to capitalize on the bullish momentum. To use this technique, remain in the trade until the stock closes beneath the indicator.

For a look at today’s earnings schedule, check out our earnings calendar.