NVIDIA Corporation (NASDAQ: NVDA) had provided investors a golden opportunity in 2020 for steady upward growth. The companies share price gained 121% in value in 2020 alone. The tech giant manufactures Graphic Processing Units (GPU) for Gaming and specialised markets and is seeing a surge in demand in recent quarters. However, in 2021 NVDA stock has seen higher levels of volatility, alongside majority of the tech market. With the addition volatility at play, investors are now asking how NVDA stock will perform for the rest of 2021 and beyond. This article will breakdown what you need to know about NVDA’s stock forecast over the next few years.
Table of contents
What are analysts forecasting for NVDA stock?
Firstly, the companies midterm outlook from analysts perspective is overwhelmingly bullish. Across the board of 32 Wallstreet analysts, the average rating is a buy with 27 Buy ratings. The average 12 month price target for NVDA stock is $643 a share, suggesting a slight upside of 7.3% from the current trading price. Since our previous article on NVDA stock in December, the average price target has increased by 13% which is a good sign for shareholders.
Large institutions weigh in on NVIDIA stock
Evidently, analyst sentiment has cemented confidence in the longer term performance of NVDA on Wallstreet. Here are some of the more recent targets released by some of the largest financial institutions in the world.
- Barclays Capital 4/19/2021 – analyst Blayne Curtis boosted the 12 month price target from $600 to $650 a share. The overall rating from Barclays is overweight, suggesting the UK financial institution sees stable growth for NVDA stock.
- Wells Fargo 4/19/2021– analyst Aaron Rakers increased the price target from $625 to $715 a share (upside of 19%). The Bank also maintained their overweight rating on the stock.
- JP Morgan 3/3/2021– analyst Harlan Sur boosted the 12 month price target from $605 to $660 a share. Evidently, the above institutions are confident NVDA stock will break the $650 mark in 2021.
What are the financial forecasts for NVIDIA in 2021?
Firstly, the strong revenue growth for the company in 2020 has been a key driving force in investor confidence. In the most recent quarter, the company recorded revenue of $5 Billion, a 61% improvement year on year. The company actually broke multiple quarterly records in gaming revenue and Data centre revenue.
“Q4 was another record quarter, capping a breakout year for NVIDIA’s computing platforms…Our pioneering work in accelerated computing has led to gaming becoming the world’s most popular entertainment, to supercomputing being democratized for all researchers, and to AI emerging as the most important force in technology.said Jensen Huang, founder and CEO of NVIDIA.
The revenue forecasts for NVDA for 2021 and beyond
The average revenue forecast from Wallstreet analysts for the Fiscal year of 2022 estimate revenue to hit $22.41 Billion according Yahoo Finance data. This illustrates a forecasted 34% growth in revenue YOY, which is relatively strong for a large blue chip stock. In addition, analysts expect the company to generate upwards of $25 Billion in the fiscal year of 2023. From these forecasts we can conclude that analysts are bullish on NVIDIA’s revenue outlook mid term.
However, its important to note these forecasts may be subject to change in the near future due to guidance provided in future quarterly earnings. In particular, the earnings call on May 26th for Q1 Revenue will likely provide investors greater guidance on the midterm outlook.
“While our fiscal 2022 first quarter is not yet complete, Q1 total revenue is tracking above the $5.30 billion outlook provided during our fiscal year-end earnings call. We are experiencing broad-based strength, with all our market platforms driving upside to our initial outlook,”said Colette Kress, executive vice president and chief financial officer of NVIDIA.
What are the ‘smart money’ indicators saying?
The institutional ownership changes can provide investors insight into how larger fund managers perceive NVDA stock. Changes of ownership can be due to many reasons, however certain indicators can set off alarm bells for investors. For example, unusual selling from some of the companies largest institutional holders can be a red flag for investors. A larger stakeholder in NVDA stock is FMR with a market value of $27.25 Billion. For this quarter, FMR increased their holdings by 4.4% which is a positive sign for investors.
I am obliged to remind our viewers that this is not advice but rather investment commentary from extensive research.
In conclusion, NVDA is showing some positive signs moving into 2021 for long term investors. This includes the positive analysts sentiment, aggressive revenue growth and a surplus in institutional ownership. However, there is no reward without risk and we have seen NVDA experience higher than usual levels of volatility in the past 6 months of trading. Therefore investors may need to price in the additional volatility into their risk strategy.
Written by Tyger Fitzpatrick
The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
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