There's been a lot of positive news-flow around NVIDIA lately. With the technicals falling in place, NVIDIA looks set to resume its uptrend.
Shares of NVIDIA Corporation (NASDAQ:NVDA) haven't started the year very well. Or should we say, they haven't been able to hold onto what was a good start to the year. NVDA stock closed the first day of the year at $102 a share, subsequently rising to as high as ~$121 a share in just over a month. However, NVIDIA eventually lost steam, falling sharply following its latest earnings announcement, which didn't please some investors all that much, apparently. To be fair, NVIDIA delivered strong numbers, and in reality, each of those numbers actually beat analysts' expectations.
For that matter, even NVIDIA's forward guidance, which some analysts blamed for the post earnings correction, was better than analysts had projected. And while some analysts argued that NVIDIA's guidance didn't beat expectations by a big enough margin, that argument is just hard to get your head around. If those were your 'expectations', why would you expect a company to issue a guidance that's significantly higher? In a sense, that would basically undermine the very essence and meaning of 'analyst estimates'. In the end, you'd probably have to pin the blame on NVIDIA's stellar run throughout 2016, and the beginning of 2017. In such cases, pretty much any reason is good enough to trigger a correction.
A Slew Of Positive News For NVIDIA Shareholders.
What's also interesting is that investors seem to have sidelined most of the positive news-flow since then, refusing to buy into the occasional positive momentum. Even at certain points along the way when NVIDIA stock had clearly entered oversold territory, based on multiple technical triggers. For instance, we discussed how some popular technical indicators were lining up nicely for NVIDIA going into its much-anticipated unveiling of the GTX 1080 Ti. Since then, however, more and more positive news has come through. Given all of that, combined with the bullish MACD crossover we saw two days ago, and yesterday's nice little uptick for the second day on the trot, NVIDIA looks set to move higher.
For starters, at GDC 2017, NVIDIA took the wraps off its latest graphics card, the GTX 1080 Ti. And this launch is probably going to be the single, most important growth driver for NVIDIA over the coming months. The GTX 1080 Ti, NVIDIA's fastest GPU ever, which means that it's even faster than its previous top of the line Titan X. What's more, NVIDIA has priced the 1080 Ti at $699 a piece, which is significantly lower than the Titan X's $1200 price tag. If that's not good enough, some sources, like this recent post on Seeking Alpha, claim that AMD Vega falls short of the GTX 1080 Ti on every test in the CompuBench 1.5 desktop benchmark. If you're interested, a colleague of mine looked at that in detail in this recent post on the AMD NVIDIA GPU battle. If that's really the case, NVIDIA may have a lot of upside ahead. Even more so because the launch of AMD's Vega GPUs could be at least a couple of months away.
NVIDIA has also recently announced several partnerships lately, like the one with Microsoft, dubbed Olympus, aimed at maximizing GPU performance for data centers. Then there are also other partnerships in the self-driving cars space, like the one with Bosch, and another one with PACCAR (NASDAQ:PCAR), to develop autonomous trucks. Of course, most of these partnerships will most likely take a while before they can translate to any monetary benefits for NVIDIA. What these deals do, though, is reinforce NVIDIA's grip over this market, which even pushed Intel (NASDAQ:INTC) to acquire Mobileye (NYSE:MBLY), to build a presence in this space. Mobileye is the company that lost business from Tesla Inc (NASDAQ:TSLA) to NVIDIA last year. Putting that aside, more importantly, the price that Intel is paying to acquire Mobileye has indirectly pointed to the fact that NVIDIA may be significantly undervalued.
Lastly, on the technical front, the Moving Average Convergence Divergence or MACD seems to be the only indicator that's been working reliably with NVDA stock lately. The MACD fell below the signal line - a bearish signal - following NVIDIA's earnings in Feb and has stayed below the signal line ever since, until two days ago. In what is widely acknowledged as a bullish signal, the MACD finally rose above the signal line two days ago, and the stock has continued to edge higher since. In fact, NVIDIA's small moves have gone almost unnoticed. And the stock is now up by over 5% over the last five days. As it appears, NVIDIA stock could well be on course to reclaim higher ground going forward.
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