Nvidia Stock Price Forecast July 2021 – Time to Buy NVDA?

Nvidia (NVDA) stock gained over 1% yesterday and hit its 52-week high of $833.68 in intraday trade. The stock is up almost 58% in 2021 and is among the top 20 gainers in the S&P 500 index. What’s the forecast for Nvidia stock in 2021 and is it a good time to buy the stock?

Nvidia stock was among the top gainers in the S&P 500 last year also. While the performance of S&P 500 constituents looks like the mirror opposite of 2020 and most top gainers of last year are in the bottom half this year, NVDA stock stands out as a notable exception.

Nvidia stock technical analysis

Nvidia stock is looking bullish on the charts. It trades above its 30-day, 50-day, 100-day, and 200-day SMA (simple moving average) which is a bullish technical indicator. The stock has found a strong support near the 200-day SMA and currently trades almost 44% above the price level. The MACD (moving average convergence divergence) is 44.25 which is a bullish technical indicator.

However, after the sharp rise over the last few trading sessions, NVDA stock is looking overbought with a 14-day RSI (relative strength index) of 83.4. RSI values above 70 signal overbought positions while values below 30 are oversold positions. That said, overall Nvidia stock is in a technical uptrend.

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NVDA stock recent developments

Yesterday Nvidia launched Cambridge-1, which is the UK’s most powerful supercomputer. “Cambridge-1 will empower world-leading researchers in business and academia with the ability to perform their life’s work on the U.K.’s most powerful supercomputer, unlocking clues to disease and treatments at a scale and speed previously impossible in the U.K.,” said Jensen Huang, founder, and CEO of Nvidia.

Meanwhile, things are not really smooth by Nvidia in the UK as the country’s competition watchdog is probing its acquisition of Arm Holdings. The company last year announced the acquisition of Arm from SoftBank in a $40 billion cash and stock deal. Arm designs low-powered chips that are used in almost all of the world’s smartphones and would have added to Nvidia’s capabilities.

Hermann Hauser, a co-founder of Arm is among those opposing the acquisition. “It’s the last European technology company with global relevance and it’s being sold to the Americans,” Hauser had said last year.

Nvidia stock forecast

Most Wall Street analysts are bullish on Nvidia stock. Of the 41 analysts covering the stock, 34 have a buy rating while five rate them as a hold. The remaining two analysts have a sell or equivalent rating on NVDA stock. The stock has a median target price of $725 which is a discount of over 12% over current prices. The stock trades 47% above its street low target price of $440 while the street high target price of $1,000 implies an upside of almost 21% over current prices.

Analysts turn bullish on NVDA stock

Yesterday, KeyBanc raised Nvidia’s target price from $775 to $950 and maintained the overweight rating citing “robust” gaming demand. “Feedback that confirms gaming demand remains robust and has not been inflated by crypto mining demand with the introduction of cryptocurrency mining processor’s and healthy data center strength drives our increased estimates and price target,” KeyBanc said in its release.

Earlier this month, BMO raised Nvidia’s target price to a street high of $1,000. “For NVDA, we are raising our target price to $1,000 from $750, based on our confidence in the data center business as it continues to evolve from hardware to a hardware with a meaningful software component further out,” said BMO’s analyst Ambrish Srivastava. He added, “As we look further out to the company’s data center business, we now see the business growing to a $32 billion business a few years out vs. our prior expectation of $25 billion.”

Strong growth outlook for NVDA

Analysts expect Nvidia’s revenues to rise 49% in the fiscal year 2022 which will end on 31 January 2022. The revenues had increased 52.7% in the previous fiscal year. Nvidia is among the beneficiaries of the increased pace of digitization and the rising demand for online gaming. Nvidia chips are also used in vehicles. The company has also launched the next-generation chip called Atlan which will also be used in autonomous vehicles.

NVDA stock currently trades at an NTM (next-12 months) PE of 51.4x which is higher than the 48x, 37x, and 36x that it has averaged in the last one year, three years, and five years respectively.

That said, Nvidia’s outlook looks very strong and the company looks well placed to capitalize on the emerging trends ranging from autonomous driving to online gaming. The 5G supercycle is another growth driver for the company. If the Arm acquisition can get regulatory approvals, it will further add value for Nvidia investors.

Overall, despite having surged sharply over the last year, Nvidia stock still looks like a good buy. The stock should turn out to be a winner in the long term looking at the innovative product lineup and strong management team.

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