NVIDIA Stock Price Forecast December 2021 – Time to Buy NVDA Stock?

With a YTD gain of 127%, Nvidia (NYSE: NVDA) is among the top 10 gainers in the S&P 500 this year. The stock was among the top gainers in 2020 as well.

Nvidia stock has created a lot of wealth for investors over the last decade where the stock has gained almost 8,500%. The returns are way ahead of the broader markets. The stock has continued to surprise on the upside and has been gaining market share from competitors. What’s the 2022 forecast for NVDA stock and is it a good buy now?

Nvidia stock technical analysis

Nvidia stock is looking bullish on the charts and is trading above all key moving averages including the 50-day, 100-day, and 200-day SMA (simple moving average). The 14-day RSI (relative strength index) of 55.4 is a neutral indicator. RSI values above 70 signal overbought positions while values below 30 signal oversold positions. The 12,26 MACD (moving average convergence divergence) also gives a buy signal. NVDA stock has been in an uptrend which might continue in the near term.

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NVDA stock recent developments

Nvidia has been expanding its automotive offerings. NIO recently unveiled its ET5 sedan, which would be a budget sedan from the Chinese EV (electric vehicle) company. The AI features on the car are powered by the NIO Adam supercomputer, built on four NVIDIA DRIVE Orin systems-on-a-chip (SoC). NIO’s ET7 sedan also featured Nvidia products.

Xpeng Motors, which is another Chinese EV company, also used Nvidia’s DRIVE Orin for AI feature Xpilot 4.0 in the G9 SUV. “Xpilot 4.0 is built on two NVIDIA DRIVE Orin systems-on-a-chip (SoC), achieving 508 trillion operations per second (TOPS). It uses an 8-million-pixel front-view camera and 2.9-million-pixel side-view cameras that cover front, rear, left and right views, as well as a highly integrated and expandable domain controller,” said Nvidia.

Metaverse

Nvidia is a play on multiple themes ranging from blockchain, 5G, autonomous driving, and the metaverse. JPMorgan, which is bullish on NVDA stock sees data centers/computing, PC gaming, and autonomous driving the company’s growth.

Nvidia could see strong growth amid the continued momentum in gaming. Metaverse could be another long-term driver for the stock where the company has come up with its Omniverse. According to Wells Fargo, “We see Omniverse as a key enabler/platform for the development of the metaverse across a wide range of vertical applications.”

Metaverse could be a multi-billion-dollar opportunity and several companies are focusing on the industry. This includes Facebook, which even changed the company’s name to Meta platforms to reflect its priorities.

Brokerages see Nvidia stock as a top 2022 pick

Nvidia was among the top S&P 500 gainers in 2020 and looks set to be among the top gainers in 2021 also. Wall Street analysts remain bullish on the stock and Citi and UBS are among the brokerages that have listed NVDA stock as a top 2020 pick.

“We update our coverage rankings post 3Q earnings and into 2022. Overall, we prefer semi caps over semis on ~10% valuation discount to 5-year historical average and see a path towards $100B WFE (wafer fabrication equipment),” said Citi in its note.

UBS also liked Nvidia stock for its stable revenues. “In semis, we continue to favor the compute and memory verticals due to our structurally bullish demand view around AI and the push of more compute (and memory) to the edge. In compute, we favor NVDA as it builds more stable revenue sources around its wide GPU and software moats,” said UBS.

NVDA stock forecast

Most Wall Street analysts are bullish on Nvidia stock. Of the 43 analysts covering the stock, 35 have a buy rating while five rate them as a hold. The remaining three analysts have a sell or equivalent rating on NVDA stock. The stock has a median target price of $350 which is a premium of 13.1% over current prices. The stock trades 35% above its street low target price of $200 while the street high target price of $400 implies an upside of 29.2% over current prices.

Analysts have been gradually raising their target price on NVDA stock. We could see the trend continue in 2022 as well as analysts’ price action plays catch up with Nvidia’s price action.

Nvidia stock long-term forecast

The long-term forecast for Nvidia stock looks quite bullish looking at the various high growth themes like AI that the company is targeting. Also, the digital transformation and growing gaming demand bode well for NVIDIA in the long term. The stock looks a good ancillary play on the digital transformation. Notably, autonomous driving would require a lot of high-quality chips and NVIDIA is positioning itself for a strong position in the lucrative and fast-growing market.

If the regulators in the UK approve the deal to acquire Arm Holdings it would make NVDA a market leader in mobile chips. Analysts polled by Koyfin expect NVDA to post revenue growth of almost 60% in the current fiscal year. The growth is however expected to fall to 18% and 16.5% in the next two fiscal years. That said, we could see an upwards revision in these estimates as the company expands its new offerings.

Should you buy NVDA stock?

Nvidia trades at an NTM (next-12 months) PE multiple of 61.7x. The multiples have expanded over the last week amid the rise in the stock. However, they are below their 2021 highs. The valuations don’t appear too steep considering the growth outlook. Nvidia has been a wealth creator in the last decade and looks set to do so in this decade also.

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