NVIDIA Stock Targets $5T Market Cap Ahead of Key Client Earnings

Key Insights:

• NVIDIA stock price continued its strong bull run this year.
• The stock may surge to $200, hitting its market cap of over $5 trillion.
• Technicals and fundamentals point to more gains as the earnings season continues.

NVIDIA stock price rally gained steam on Monday, July 28, as it moved to a record high of $174. Its market cap jumped to $4.28 trillion, solidifying its status as the biggest company globally. Its market capitalization is now eying $5 trillion ahead of key client earnings.

NVIDIA Stock Price Could Hit $202 and Market Cap to $5 Trillion

The weekly chart shows that the NVIDIA stock price has been in a strong bull run for the past few years. It has jumped by over $24% this year and 101% from its lowest point in April.

The NVDA stock has recently crossed the important resistance level at $153, the highest point in January and the previous all-time high. By moving above that level, the stock invalidated the bearish double-top pattern, a popular bearish sign in technical analysis.

The stock remains much higher than the 50-week and 100-week Exponential Moving Averages (EMA), a sign that the bullish momentum is gaining steam.

Further, the Average Directional Index (ADX) has started to point upwards, a sign that it is gaining momentum. The Relative Strength Index (RSI) has just hit its overbought level at 70, meaning that it has more upside to go before it gets highly overbought.

Therefore, the most likely scenario is where the NVIDIA stock price continues rising ahead of its earnings in August. If this happens, the next point to watch will be at $200.

Such a move, assuming that its outstanding shares are at 24.64 billion, will bring its market capitalization to over $5 trillion.

The bullish NVIDIA stock price forecast will become invalid if it crashes below the key support at $153.

Key Earnings Ahead

NVIDIA will publish its quarterly results on August 27. Even before that, there were signs that the company’s financial results would be strong. First, Taiwan Semiconductor (TSMS) published strong financial results, with its market capitalization jumping to over $1.26 trillion.

TSMC expects that its sales will jump by 30% this year, helped by the strong demand for artificial intelligence (AI) chips. These results are notable for NVIDIA since it is its biggest supplier.

This week will be crucial for NVIDIA as some of its biggest clients publish their earnings. Some of these clients are firms like Microsoft, Apple, Amazon, and Meta Platforms.

These firms, together with Alphabet, account for a substantial share of its earnings. Microsoft is estimated to contribute between 15% and 19% of its revenue, while Meta Platforms, Amazon, and Alphabet account for over 5% of its sales each.

Therefore, strong earnings by these technology giants will raise the possibility of good results by NVIDIA. These firms will also provide guidance on AI infrastructure spending.

NVDA Earnings to Help Justify Valuation

Wall Street analysts are expecting NVIDIA to publish strong financial results next month. According to Yahoo Finance, analysts anticipate that the company’s revenue rose by 51% in the last quarter to $45.65 billion.

They also expect that the next quarter’s revenue will grow by 48% to $51 billion. Altogether, the hope is that the company’s annual revenue will hit $200 billion this year, followed by $253 billion in the next financial year.

NVIDIA is using its windfall to reward its investors. For example, the company announced a $50 billion share buyback in August last year, helping its outstanding shares drop to 24.38 billion from over 25 billion in 2022.

Its growth and shareholder returns are helping to justify its valuation, with its forward P/E ratio being 40, much lower than other slow-growing companies like Visa and Mastercard.

Solid Technicals and Fundamentals Support NVIDIA Stock Price Growth

The NVIDIA stock price has been in a strong bullish trend this year. Moreover, there is a likelihood that the company will continue this momentum as the earnings season gains steam.

It has strong technicals, with the Relative Strength Index and the MACD continuing to rise. It also has strong fundamentals, including its cheaper valuation and strong growth.

Disclaimer

This article is for informational purposes only and provides no financial, investment, or other advice. The author or any people mentioned in this article are not responsible for any financial loss that may occur from investing in or trading. Please do your research before making any financial decisions.