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 (All Sessions)’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.
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