Price target for Nvidia raised, but the stock is overbought in the near term


Nvidia CEO Jensen Huang, at the World Government Summit in Dubai, said that shifts to accelerated computing are likely to continue and that countries need to build on their AI infrastructure. In an interview Huang said that "There's about $1 trillion worth of installed base of data centres around the world. And over the course of the next four or five years we'll have $2 trillion worth of data centres that will be powering software around the world, and all of it's going to be accelerated."

Nvidia's share price concurs with the company now trading at $722, having increased by almost 50% year-to-date. Melius Research Analyst Ben Reitzes has raised his target for Nvidia from $750 to $920 based on a PE of 30 times forward earnings ending fiscal year 2027. That is a 27% premium from current levels.

FactSet suggests that Nvidia will report $59.0 billion in revenue and earn $12.36 per share for the fiscal year that just ended. The company will release its results on Feb. 21.

Technically, Nvidia is running hot, with its RSI overbought at levels over 80 (green rectangle). This suggests that the stock will at least need to pause for a breather before resuming its uptrend. Given the strong gains this year, profit-taking may be looming and the results may be a catalyst here.

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Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

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