Nvidia (NVDA) stock is inching lower ahead of the artificial intelligence (AI) chip leader’s fiscal Q2 earnings, scheduled to be released after the market closes on Aug. 26. Consensus is for the semiconductor behemoth to record $2.01 in earnings per share (EPS) — more than double the figure it posted for the same quarter last year.
Despite a recent pullback, Nvidia shares remain up nearly 15% versus the start of this year.
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www.barchart.comData Remains Overwhelmingly Bullish for Nvidia Stock
The technical setup heading into Nvidia’s earnings is largely bullish.
NVDA stock is currently trading decisively above its major moving averages (MA), signaling bulls are firmly in control across multiple timeframes.
Plus, the company’s relative strength index (RSI) sits in the low 50s, indicating massive upside room before it hits the overbought territory.
Crucially, this optimism is mirrored in the options market sentiment, as evidenced by the put-to-call ratio of 0.69x on contracts expiring Aug. 28.
According to Barchart, the upper price on those contracts sits north of $226 currently, indicating potential for a more than 5% rally in the day following the earnings event.
BMO Dubs NVDA Shares a Top Pick for AI Exposure
BMO Capital Markets also recommends buying Nvidia shares heading into the quarterly print. In fact, in its latest research note, analyst Harsh Kumar reiterated the giant as a “Top Pick” for AI exposure and announced a $340 price target, signaling potential for a nearly 60% upside from here.
At roughly 18x forward earnings, NVDA is trading at a discount currently given its “next-gen Vera Rubin NVL72 systems ramps in 2H,” he told clients.
Nvidia announced a massive $80 billion stock buyback plan in May, which, together with a small dividend yield of 0.47%, makes its stock a compelling long-term holding at the current price.
How Wall Street Recommends Playing Nvidia Corp
Note that Kumar isn’t alone among Wall Street analysts feeling positive about NVDA shares for the next 12 months.
The consensus rating on Nvidia sits at “Strong Buy,” with the mean price target of about $304 indicating potential upside of more than 40% from current levels.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.