Why Nvidia is not the game to miss

Congress building
Tony Sycmore
By : ,  Market Analyst

With details of the timing and format of the summit still to be confirmed, the proposed summit allows U.S-based traders to enjoy their Presidents Day long weekend and focus on matters closer to home, including earnings season, which winds up this week.

While there have been some notable beats and misses, according to Factset of the 84% of US S&P 500 companies that have reported December quarter earnings.  “77% have reported actual EPS above the mean EPS estimate, which is slightly above the five-year average of 76%.”

One such company that reported an EPS beat this reporting season was Nvidia Corporation (NVDA), maker of graphic processing units used to power video games and graphics software. Nvidia reported Adjusted EPS of $1.32 vs analysts’ expectations of $1.22, while the company also provided a Revenue beat of $7.6b vs $7.4b expected.

Despite the earnings beat, the Nvidia share price has fallen post the earnings report, a trend that commenced in November as the high growth tech sector was rerated to reflect the prospect of higher interest rates. Over the past three months, Nvidia’s price to earnings ratio has fallen from an eye-watering 110X to a more reasonable 60X.

To take advantage of the substantial growth opportunities that Nvidia provides, its more attractive valuation, and easing geopolitical tensions, we favour buying Nvidia at price of $240 or better.

The stop loss would be placed below horizontal (Sep highs), and the uptrend support at $230/220. The profit target is $280.00, providing a two to one risk-reward trade.

NVDA Daily Chart 21st of Feb

Source Tradingview. The figures stated areas of February 21st, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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