When I first weighed in on NVIDIA (NASDAQ:NVDA), I called it one of the top “blood in the streets” opportunities. That was on March 25, as the company’s shares traded for just $209 per share.
It was difficult to ignore the stock’s positive technicals.
At the time, NVIDIA had become aggressively oversold based on its relative strength (RSI), MACD, and Williams’ %R metrics. I wrote, “I strongly believe NVDA will refill its bearish gap at $300. When it comes to Nvidia, ignore the noise, and focus on the long-term opportunity thanks to gaming, data center resources, autonomous vehicles, and even artificial intelligence.”
NVIDIA Has Plenty of Near-Term Catalysts
As a result of the novel coronavirus, demand for cloud services has increased as office closures have pushed more people online. That’s good news for NVIDIA, which just announced it’s working with Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) on the Google Cloud platform to launch a cloud service which will be powered by NVIDIA’s A100 GPU chip.
Other cloud service providers could soon incorporate A100 GPUs in their offerings. Among the companies that could use the chip are Alibaba (NYSE:BABA), Cisco (NASDAQ:CSCO), Dell Technologies (NYSE:DELL), and Microsoft (NASDAQ:MSFT).
Meanwhile, as the launch of new video–game consoles from Microsoft and Sony (NYSE:SNE) approaches, Bank of America just raised its price target on NVDA stock to $460 from $420. As consoles and games get better, they need more processing power. That means Nvidia will need to develop even more chips for them. According to CFO Collette Kress, “}NVIDIA’s} gaming {business} is thriving.”
Data Center Gains Could Boost NVDA Stock
According to Barron’s contributor Max A. Cherney, “Analysts project that the company’s data center revenue will begin to exceed its gaming sales for the company’s fiscal second quarter ending in July. Analyst models predict full-year datacenter sales of $6.5 billion compared with gaming sales of $6.1 billion.”
Moreover, NVIDIA’s exposure to eSports is improving its outlook.
According to Investorplace contributor, Faisal Humayun, “Nvidia offers the GeForce GTX 10 Series graphics cards. The card is already being used in top esports games globally. It goes without saying that as the esports market gets bigger, the sale of graphics card will accelerate. Nvidia therefore stands to benefit from the promising growth outlook.”
NVIDIA’s Earnings Growth Is Accelerating
NVIDIA posted first-quarter revenue of $3.08 billion, up 39% year-over-year. Its earnings per share soared 130% to $1.47. The company also just completed its acquisition of Mellanox.
“NVIDIA had an excellent quarter. The acquisition of Mellanox expands our cloud and data center opportunity. We raised the bar for AI computing with the launch and shipment of our Ampere GPU. And our digital GTC conference attracted a record number of developers, highlighting the accelerating adoption of NVIDIA GPU computing,” the company’s CEO, Jensen Huang, said in a statement.
“Our Data Center business achieved a record and its first $1 billion quarter. NVIDIA is well positioned to advance the most powerful technology forces of our time – cloud computing and AI,” the CEO added.
The Bottom Line on NVDA Stock
With the cloud, gaming, and data centers providing near-term catalysts for NVIDIA, I strongly believe that the shares of NVDA could easily climb meaningfully higher. After calling NVDA stock one of the market’s top opportunities when it was changing hands for just $209 per share, I stand by that characterization. It seems that nothing can keep this stock down. Even after its monster run higher, investors should still consider buying the stock.
Ian Cooper, an InvestorPlace.com contributor, has been analyzing stocks and options for web-based advisories since 1999. As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.
