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NVIDIA's (NVDA) Rally May Continue Next Year: Here's Why

NVIDIA Corporation NVDA is currently one of the top-performing stocks in the technology sector. The stock’s rally reflects the company’s strong fundamentals. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.

The company has performed brilliantly so far this year and has the potential to carry on the momentum in the next year.

Why an Attractive Pick?

Share Price Appreciation: Shares of NVIDIA have rallied 119.6%, comparing favorably with the S&P 500’s rise of 15.6%.

Solid Rank & Growth Score: NVIDIA currently carries a Zacks Rank #1 (Strong Buy) and has a Growth Score of B. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or #2 (Buy), offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: All 13 analysts covering the stock have raised their estimates for the current fiscal over the past 60 days versus no southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for the current year has moved 6.4% north.

Positive Earnings Surprise History: NVIDIA has an impressive earnings surprise history. The company outpaced estimates in the trailing four quarters, delivering an average earnings surprise of 11.5%.

Solid Growth Prospects: The Zacks Consensus Estimate of $9.71 for fiscal 2021 earnings suggests year-over-year growth of 67.7%. Moreover, earnings are expected to register 18.7% growth in fiscal 2022 and reach $11.53 per share. Its long-term earnings per share growth rate is expected to be 18.3%.

Growth Drivers: NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit or GPU.

The graphic chip maker is benefiting from the coronavirus-induced work-from-home and learn-at-home wave. The company has witnessed solid demand for GeForce desktop and notebook GPUs, which is boosting gaming revenues.

Moreover, a surge in Hyperscale demand is a tailwind for the company’s Data Center business. Expansion of NVIDIA GeForce NOW is expected to drive user base. Further, solid uptake of AI-based smart cockpit infotainment solutions is a boon.

The company is also working with more than 320 automakers, tier-one suppliers, automotive research institutions, HD mapping companies and start-ups to develop and deploy AI systems for self-driving vehicles.

Additionally, the Arm acquisition is expected to aid NVIDIA in offering end-to-end ecosystem of technology across the data center, IoT, autonomous vehicles and mobile domains. The company is now well poised to upscale its inference technology, drivers, and accelerators by utilizing Arm’s robust architecture and chip designs.

Other Stocks to Consider

Some other top-ranked stocks in the broader technology sector include The Trade Desk TTD, Qorvo QRVO and Micron Technology MU, each sporting a Zacks Rank #1.

The long-term earnings per share growth rate for Trade Desk, Qorvo and Micron is pegged at 25%, 15.8% and 12.3%, respectively.

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Micron Technology, Inc. (MU): Free Stock Analysis Report
 
NVIDIA Corporation (NVDA): Free Stock Analysis Report
 
Qorvo, Inc. (QRVO): Free Stock Analysis Report
 
The Trade Desk Inc. (TTD): Free Stock Analysis Report
 
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