Nvidia (NASDAQ:NVDA) shares have cooled lately, but in the good way. When a stock gets going, investors want to see that it doesn’t go full-on parabolic. Even after its latest consolidation, NVDA stock is still up 130% from the March low.
That’s about double the return from the Nasdaq, crushes Intel (NASDAQ:INTC) and even tops Advanced Micro Devices (NASDAQ:AMD). AMD has been surging in recent trading and even from its March low to the recent highs, shares are up “just” 94.9%.
It goes to show just how strong NVDA stock has been. Even after this run though, there are reasons to remain bullish.
Short-Term Catalysts Are in Play
The novel coronavirus is wreaking havoc in a number of industries, as well as the overall economy. However, there have been a few companies that are seeing an acceleration in product demand as a result. Nvidia is one of those companies.
Gaming has gone through the roof, a trend that can be seen in video game sales. Hardware and software sales have been surging for months, as is demand for data centers. For Nvidia, this has turned into a boon and it’s one reason the stock price has soared in response.
Current estimates call for 34.4% revenue growth this year, alongside 40.6% earnings growth. Expectations continue to creep higher as demand remains strong.
Another short-term catalyst? Being a rare breed. There are not many companies like Nvidia, which is a high-quality growth company seeing an acceleration during Covid-19. Therefore, the few stocks that exist in that nature — like PayPal (NASDAQ:PYPL) — are now worth a premium to investors.
If the Nasdaq is going to run to new all-time highs, you better believe its best-in-breed components will too.
Don’t Forget About the Long-Term
Luckily, this isn’t a flash-in-the-pan type name only thriving on short-term catalysts. Nvidia was set for a big year, even before these issues arose.
After a tough Q4 and bumpy 2019, NVDA stock finally had momentum in Q1 2020. Shares hit new all-time highs on better-than-expected earnings at about the time the market rolled over due to the coronavirus.
So with or without Covid-19, Nvidia was primed for success. Put simply, it has set up camp in numerous secular growth themes. It is a backbone in the technology sector, with long-term themes driving its business. That’s in autonomous vehicles, robotics, the cloud, data center, gaming and artificial intelligence/machine learning.
That’s why, despite a strong year of growth in fiscal 2021 (this year), analysts expect another strong year in fiscal 2022. Consensus estimates call for 18% revenue growth and 22% earnings growth. Who knows, those may prove conservative too.
Finally, Nvidia continues to make accretive acquisitions. It just closed on its Mellanox deal not long ago. That was a perfect tie-in with its existing business — which already worked with Nvidia — and gave an instant boost to earnings, revenue, margin and cash flow.
NVDA Stock Charts Look Great
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This is a great-looking chart, illustrating exactly why NVDA stock was a steal below $200 per share. The March selloff doesn’t even look bad on this weekly chart, given the tough 2018 it had and the strong rebound we’ve seen over the past few months.
Trends don’t last forever, but it’s tough to bet against one when it’s in play. The 10-week moving average continues to guide this one higher. If Nvidia loses the 10-day moving average and the 161.8% extension near $400, I would love a dip-buying opportunity at $320 or even better, one at the big breakout mark near $280.
A continuation higher — which looks possible as long as the overall market keeps it together — puts the two-times range extension in play up near $450.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. Click here to see what Matt has up his sleeve now. As of this writing, Matt did not hold a position in any of the aforementioned securities.
