Nvidia Shares Forecast August 2021 – Time to Buy NVDA?

Shares of American multinational technology company Nvidia (NASDAQ: NVDA) are in the green today, currently trading around the $226.36 mark. The shares have delivered impressive returns due to some favourable quarterly results.

Nvidia – Technical Analysis

According to the financial statement released by Nvidia, the market cap is at $564.089 billion with total assets worth $38.65 billion. Nvidia’s revenue was at $16.68 billion in 2020 with a profit margin of 25.98%, compared to $10.92 billion in 2019.

Moving averages for Nvidia such as Exponential Moving Average (100)(181.80), Simple Moving Average (100)(177.72), Exponential Moving Average (200)(161.35) and Simple Moving Average (200)(155.84) indicates a buying action. On the other hand, Relative Strength Index (14)(70.29),  Stochastic %K (14, 3, 3)(93.35), Commodity Channel Index (20)(166.91) and Average Directional Index (14)(23.18) and most other oscillators for Nvidia are neutral.

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Recent Development

Nvidia’s performed brilliantly last quarter when it achieved an 85% year-over-year growth in its gaming revenue, totalling $3.06 billion. This represents 47% of the company’s total revenue which was caused by strong demand for its Ampere graphics processing units (GPUs). The company also noted that a mere 20% of its customer base has upgraded to its RTX series card.  This suggests that the majority of its customers still possess cards running on older architectures such as Pascal, which was introduced almost half a decade ago.

This year, Nvidia’s revenue for Q2 rose by 68% year over year to reach $6.51 billion, while adjusted earnings surged 89% to $1.04 per share. The company expects that it would record revenue of $6.8 billion this quarter, which mean a 44% year-over-year increase. With the PC hardware market expected to grow at an annual pace of more than 20% through 2024, it puts the company in a favourable position.  For example, the company expects GPU sales to increase to $54 billion in 2025 from $23.6 billion in 2020. All of this is an indication that the healthy growth of its gaming business is here to stay for a long time to come.

Should You Buy NVDA Shares?

Investors interested in NVDA shares should look at the other sectors in addition to its gaming business, such as its data centre segment which accounts for 36% of its top line. Revenue from this market increased 35% year over year to reach $2.4 billion.  This is the result of the increasing adoption of its data centre chips by hyper-scale and cloud computing customers such as Amazon, Alphabet and Microsoft.  The company is experiencing growth in its AI inferencing as well, whose revenue doubled thanks to the introduction of Nvidia’s new A30 GPUs, which are 4 times more capable than the previous-generation T4 chips.

Another growth driver that investors should consider is its automotive business, which is now at $152 million after increasing 37% year on year. While the automotive business had lost momentum in recent quarters, the segment is improving as the company’s winning designs are now moving into the production phase. The company is currently in possession of 8 billion worth of automotive designs that it expects to translate into revenue over the next six years. With the company already securing some partnerships last quarter, the automotive designs business can be yet another driver that accelerates the company’s growth. This gives enough reason for investors who have missed out on the shares to consider going long. The multiple catalysts of growth for the company are too hard to ignore for any investor.

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