Nvidia’s $18 Billion Rally Burns Bears Just in Time for Earnings

Posted On May 10, 2018 1:54 pm

A record valuation and increasingly bullish predictions from Wall Street have made Nvidia Corp.’s earnings report on Thursday one of the most anticipated of the season.

Nvidia has added almost $18 billion to its market value over the past five sessions with a steady climb that left shares trading at their highest in the company’s 19-year history. Whether the stock can extend that streak will hinge on the performance of Nvidia’s gaming and data center businesses, which account for about 80 percent of revenue. The chipmaker is expected to forecast fiscal second quarter revenue of $2.95 billion, up 32 percent from the year-ago period, according to an average of analyst estimates compiled by Bloomberg.

Nvidia has gained more than 140 percent in the past 12 months, almost doubling the performance of Micron Technology Inc., the second-best performer in the Philadelphia Semiconductor Index over that time. Nvidia options are implying a move of 7.7 percent after earnings, in line with the historical average for the Santa Clara, California-based company.

Short interest in Nvidia shares is about 2.7 percent of float, down from a high of 6 percent a year ago, according to financial technology and analytics firm S3 Partners. The stock has 24 buy ratings among analysts, along with 11 holds and two sells. Their 12-month average price target implies less than 1 percent upside to the stock’s last closing price.

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