In other words, I wouldn’t buy it on the expectation that it pops due to another relief rally. It’s not for certain that buying on the next bout of weakness will pay off immediately. With this, the prospect of a pullback is a positive, not a negative. Maintaining its valuation, and moving higher on earnings growth, the stock makes its way toward its past high ($346.47 per share). It may be enough to counter further multiple compression from rising interest rates. High growth from existing and emerging demand could enable it to sustain its current valuation. It’s aggressively pursuing growth opportunities in end-user markets like artificial intelligence (AI), automobiles and even the metaverse.
Still, this valuation may be reasonable if you are confident that this company will continue to deliver strong operating results.ĭemand for its GPU chips remains strong among its data center and gaming end-users. At $215 per share, it would trade for around 37.9x estimated earnings ($5.68 per share) for this fiscal year. It would still sport a premium valuation at that price level. Sure, a move back to around $215 per share wouldn’t make it cheap. So, what’s the takeaway here? If you’ve been looking to enter a long-term position in NVDA stock, the opportunity to do so could soon emerge. If the market continues to react negatively to the latest Fed updates? It’s possible that Nvidia, like other growth/tech names, could give back more of their respective relief rally gains. In the case of this chip maker’s shares, they’ve dropped around 14.6% since March 29. Rate hike fears are starting to again put pressure on growth stocks. Between recent comments from Fed Governor Lael Brainard, as well as the Fed’s March meeting minutes on April 6, concerns about changes in Fed policy are ratcheting back up. This helped to clear up some uncertainty, driving investors back into growth stocks hit hard by the prospect of more hawkish monetary policy.īut since the end of last month, this relief rally has petered out.
Federal Reserve officially hiked interest rates for the first time since 2018. That is, the relief rally stocks experienced after the U.S. Rather, its bolt from around $215 per share on March 15, to prices nearing $290 per share on March 29, was entirely the product of market-related factors. Nvidia (NASDAQ: NVDA) is a company with strong fundamentals, but these weren’t the main driver of the NVDA stock rally last month.
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