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Nvidia (NVDA) Dips More Than Broader Markets: What You Should Know

Nvidia (NVDA) closed the most recent trading day at $179.42, moving -0.86% from the previous trading session. This move lagged the S&P 500's daily loss of 0.07%. Meanwhile, the Dow gained 0.08%, and the Nasdaq, a tech-heavy index, lost 0.04%.

Heading into today, shares of the maker of graphics chips for gaming and artificial intelligence had gained 19.34% over the past month, outpacing the Computer and Technology sector's gain of 8.42% and the S&P 500's gain of 8.06% in that time.

Investors will be hoping for strength from Nvidia as it approaches its next earnings release, which is expected to be August 24, 2022. The company is expected to report EPS of $1.03, down 0.96% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.12 billion, up 9.48% from the year-ago period.

NVDA's full-year Zacks Consensus Estimates are calling for earnings of $5 per share and revenue of $31.41 billion. These results would represent year-over-year changes of +12.61% and +16.71%, respectively.

Investors should also note any recent changes to analyst estimates for Nvidia. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 6.58% lower. Nvidia currently has a Zacks Rank of #5 (Strong Sell).

In terms of valuation, Nvidia is currently trading at a Forward P/E ratio of 36.17. Its industry sports an average Forward P/E of 11.31, so we one might conclude that Nvidia is trading at a premium comparatively.

We can also see that NVDA currently has a PEG ratio of 2.77. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Semiconductor - General was holding an average PEG ratio of 2.05 at yesterday's closing price.

The Semiconductor - General industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 150, putting it in the bottom 41% of all 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.

To follow NVDA in the coming trading sessions, be sure to utilize Zacks.com.


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