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Can stock split help turn Nvidia fortunes around?

Shares of the US’ largest chipmaker rallied nearly 4% a day after it began trading on a four-for-one stock split basis.

  • Nvidia Corporation (NASDAQ: NVDA) share price rallies nearly 4% in early trading on Wednesday (21 July 2021)
  • The stock began trading on a four-for-one stock split price of US$187 a day earlier
  • On a split-adjusted basis, NVDA is down 75% in the last one month alone
  • Despite this, a trio of analysts remain bullish on the stock, raising their price targets earlier this month
  • Interested to trade Nvidia shares? Open an IG account today to get started.

NVDA stock price: what’s the latest?

Nvidia shares opened 1.4% higher a day after it began trading on a four-for-one stock split basis.

The semiconductor stock opened at a split-adjusted price of US$187 on Tuesday (20 July 2021), before finishing the session just slightly lower at US$186.

The opening price had been based on the company’s final pre-split trading price of US$751 on 19 July.

On a split-adjusted basis, the stock is down a massive 75% in the last one month alone, likely driven by the company’s proposed US$40 billion acquisition of UK chipmaker Arm Ltd, which remains inconclusive.

Nvidia has yet to receive the necessary approvals from UK, European Union, US and Chinese anti-competition authorities for the deal, which was first announced last September.

The deal was originally expected to be completed by March 2022, but the deadline has been extended to September 2022, with regulatory review processes seemingly having no end in sight any time soon.

How do analysts view NVDA?

Despite NVDA’s recent bearishness, Oppenheimer’s equity research team raised its price target earlier this month to a much more optimistic US$925 from US$700 before, alongside an unchanged ‘outperform’ call on the stock.

Analyst Rick Schafer predicted that Nvidia, along with other semiconductor stocks, are likely to beat analyst estimates in the upcoming quarters, with demand across the sector still going strong.

Truist Securities analyst William Stein was equally upbeat, lifting his firm's price target on Nvidia to US$910 from US$768 previously, while maintaining a ‘buy’ rating on the shares.

The analyst wrote that the data centre end market is likely to ‘continue to grow rapidly’, based on an analysis of sector trends.

Stein also increased his 2022 earnings per share estimate for Nvidia to US$18.13 from US$17.08 in a note dated 08 July 2021.

Finally, he believes that the chip maker will remain a leader in parallel computing solutions, which will continue to drive its long-term structural growth.

KeyBanc analyst John Vinh was the most bullish of the latest investment notes, raising his firm’s price target to US$950 from US$775.

He maintained an ‘overweight’ recommendation on the shares, citing the fact that gaming demand remains robust and has not been inflated by cryptocurrency mining trends.

Across the board, the stock has a consensus rating of ‘buy’ and price target of US$180.99, according to the latest analyst data published by MarketBeat.

The price target equates to a potential 2.75% downside from the counter’s last traded price of US$186.12.

What’s your call on Nvidia shares? Take a long or short position today.

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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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