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Nvidia hits two-month high despite Arm investigation

Nvidia shares were up as much as 4.7% this week, despite a new probe into its proposed US$40 billion acquisition of UK chipmaker Arm.

  • NVIDIA Corp’s (NASDAQ: NVDA) share price hit a two-month high earlier this week
  • This was despite the fact that UK’s main competition watchdog recently launched investigations into a potential US$40 billion takeover of UK chipmaker Arm
  • Citigroup and Oppenheimer analysts have placed the stock among their top picks
  • Looking to trade Nvidia shares? Open an IG account.

Nvidia share price: What’s the latest?

Nvidia shares closed 2.6% higher earlier this week, extending gains made the previous week.

The largest chipmaker in the US saw its stocks close Monday (11 January 2021) at US$545 each, after having hit US$556 earlier in the day.

Share price has readjusted slightly since, finishing Wednesday (13 January) at US$541.

Last Thursday (07 January), the stock rallied nearly 6% despite UK’s Competition and Markets Authority saying only a day earlier that it will be investigating Nvidia’s proposed US$40 billion acquisition of local chip maker Arm.

The rally also took place after Citigroup analysts added Nvidia to its ‘Catalyst Watch List’ that same day.

What’s the earnings outlook for Nvidia?

Citigroup analyst Atif Malik wrote in the same note that Nvidia’s stocks have trailed the performance of other PC chip makers in recent weeks.

He pointed out that Nvidia shares have fallen over 15% since hitting an early November 2020 high of US$580, as compared to the iShares semiconductor index SOXX’s gain of nearly 25% during the same time period.

As such, Malik believes that the stock has room to grow and could yield upsides in the near future.

Additionally, Citigroup also maintained their earnings per share (EPS) estimates for Nvidia at 2% to 5% above Wall Street projections, on the expectation that hyperscale-led data centre recovery in the first half of 2021 and sustained PC gaming demand could help to boost EPS.

Meanwhile, the market consensus is for Nvidia to increase EPS by 48% in the January 2021 quarter to US$2.80 per share. Sales are also expected to grow 55% year-over-year, which will take quarterly revenue close to the US$5 billion mark.

Where next for Nvidia’s share price?

On Tuesday (12 January), Wells Fargo analyst Aaron Rakers reiterated an ‘overweight’ rating and target price of US$625 on the stock.

Rakers stated that the company is ‘very well-positioned as gaming momentum continues’ following its presentation on the next-generation GeForce mobile CPUs at the CES 2021 show. He also noted that Nvidia will be launching over 70 Max-Q gaming and study laptops on 26 January 2021.

Oppenheimer analyst Rick Schafer, meanwhile, named Nvidia as one of his top equity picks in the semiconductor space in an 08 January note. He has an ‘outperform’ rating and price target of US$600 on the stock.

In terms of price prediction and ratings, NVDA currently has an average 12-month price target of US$592.32 and rating of ‘outperform’, according to data published by Wall Street Journal as of 14 January.

How to trade Nvidia with IG

Are you feeling bullish or bearish on Nvidia’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  1. Create a live or demo IG Trading Account, or log in to your existing account
  2. Enter <Nvidia Corp> in the search bar and select the instrument
  3. Choose your position size
  4. Click on ‘buy’ or ‘sell’ in the deal ticket
  5. Confirm the trade

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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