The semiconductor giant Nvidia (NASDAQ: NVDA) has been one of the best-performing stocks in the market for nearly two years as it added well over $2 trillion to its market capitalization since the artificial intelligence (AI) boom began with the release of ChatGPT in October 2022.
More recent trading, however, has put significant pressure on the blue-chip chipmaker, despite the strong rally in the last 5 sessions, and NVDA fell from the highs above $135 it reached shortly after its 10-for-1 stock split in June to its price today, in the morning of August 14, of $118.31.
NVDA stock YTD price chart. Source: FInbold
Nonetheless, despite being below the yearly highs, NVDA shares are again gaining traction with a massive 15.95% rally in the last 5 days and, with the next earnings report scheduled to release in two weeks’ time, investors are again wondering if it is the right time to invest in the semiconductor giant.
Experts predict Nvidia will have doubled EPS since Q3, 2023
At the time of publication, there exists an analyst consensus that Nvidia remains a very strong buy in the leadup to the forthcoming earnings report, even through the major value opportunity that emerged as NVDA shares fell below $100 amidst the broader stock market bloodbath of early August.
Indeed, the blue-chip chipmaker is expected to report earnings-per-share (EPS) of $0.59 – more than twice the $0.25 it reported in the third quarter (Q3) of 2023. Additionally, given that Nvidia beat forecasts in Q2 by reporting $0.58 – and that it outperformed expectations in four of the last four quarters – it is likely the upcoming report will come in stronger than expected.
Nvidia’s upside in the coming weeks and month is expected to be sufficiently large that, despite the recent rally, analysts with Goldman Sachs (NYSE: GS) still estimate that investors have an opportunity to ‘buy the dip.’
Is Nvidia stock a buy ahead of the August 28 earnings
Such a setup, however, also means there is an oversized risk for NVDA investors, given that anything other than a beat would signal either stagnation or a decline, which would likely send the semiconductor stock into a sharp decline.
Nvidia is also at risk of rising competition, with the latest coming from Huawei’s new AI chip – Ascend 910C – and from the overall fortunes of the artificial intelligence sector, which is widely, but not universally, considered ‘a bubble.’
Despite the risk, and despite some analysts forecasting the breaking of both the AI sector and a 98% plunge for Nvidia, the 12-month price targets and the overall assessments of the chipmaker are overwhelmingly bullish.
NVDA stock analyst rating. Source: TradingView
With Nvidia expected on average to rise another 20.36% in the coming 52 weeks, and with the highest estimates placing the climb at 72.21% – all the way up to $200 – in the same time frame, it is more likely than not that NVDA is strong buy as it is recovering from the latest downturn and ahead of the upcoming earnings.
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