Nvidia (NVDA) Outpaces Stock Market Gains: What You Should Know

·3-min read

In the latest trading session, Nvidia (NVDA) closed at $768.22, marking a +0.78% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.58%.

Heading into today, shares of the maker of graphics chips for gaming and artificial intelligence had gained 21.38% over the past month, outpacing the Computer and Technology sector's gain of 7.24% and the S&P 500's gain of 2.17% in that time.

NVDA will be looking to display strength as it nears its next earnings release. On that day, NVDA is projected to report earnings of $4.11 per share, which would represent year-over-year growth of 88.53%. Our most recent consensus estimate is calling for quarterly revenue of $6.31 billion, up 63.3% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $15.84 per share and revenue of $24.79 billion, which would represent changes of +58.4% and +48.66%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for NVDA. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 24.6% higher. NVDA currently has a Zacks Rank of #2 (Buy).

Digging into valuation, NVDA currently has a Forward P/E ratio of 48.13. This valuation marks a premium compared to its industry's average Forward P/E of 21.66.

It is also worth noting that NVDA currently has a PEG ratio of 2.74. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Semiconductor - General stocks are, on average, holding a PEG ratio of 2.7 based on yesterday's closing prices.

The Semiconductor - General industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 68, putting it in the top 27% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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