NVIDIA Stock: Not a Very Happy New Year for This Chip Stock

nvidia stockWatch Out for NVDA Stock in 2017

NVIDIA Corporation (NASDAQ:NVDA) stock had been breaking all records for quite a while now, and investors would have loved to see NVDA stock end the year in the green. However, the stock fell more than four percent and closed at $106.74 on the last trading session of 2016.

NVIDIA stock had already posted gains of over 220% in 2016, and has become a favorite of investors after being in the background for a number of years. The chipmaker competes with the likes of Intel Corporation (NASDAQ:INTC) and Advanced Micro Devices, Inc. (NASDAQ:AMD), but the company has grabbed the limelight away from those companies due to its success in the gaming graphics chips market.

Moreover, NVIDIA has ventured into the field of artificial intelligence (AI), and its strengthened partnership with Tesla Motors Inc (NASDAQ:TSLA) was one of the highlights of 2016. Tesla Motors and NVIDIA have partnered with each other since the early development of the “Model S” car. And now, all Tesla vehicles, including the upcoming “Model 3,” will be equipped with an NVIDIA-powered on-board “supercomputer” that can provide full self-driving capability. (Source: “Tesla and NVIDIA,” NVIDIA Corporation, last accessed January 1, 2017.)

In its last quarterly earnings, NVIDIA posted record revenue of $2.0 billion, which translates into a growth of about 54%. NVDA stock went into a frenzy as the company beat analyst expectations on earnings as well.

NVIDIA’s growth in the areas of deep learning, virtual reality (VR), gaming, data centers, cloud services, artificial intelligence (AI), and driverless cars has got investors excited. The success of the company’s new “Pascal” graphics processing unit (GPU) chips has put the company way ahead of its competitors. The GPU chips have become a huge success, and should keep NVIDIA stock buoyant in 2017.

Analysts have been bullish on the prospects of NVDA stock, with Goldman Sachs Group Inc (NYSE:GS) adding NVIDIA to its “conviction buy” list and Evercore Partners Inc. (NYSE:EVR) raising the price target of NVIDIA stock to $120.00.

And now, another piece of news comes that proves how significant the company has become in these changing times.

As per media reports, NVIDIA CEO Jen-Hsun Huang will unofficially kick off one of the world’s biggest tech shows, CES 2017, in Las Vegas this week. This role had usually been held in the past years by the likes of Microsoft Corporation (NASDAQ:MSFT) and Intel. This year, the focus of the trade show shifts to technology that enables cars to drive themselves, or allows people to talk to their devices. NVIDIA processors help power some of those futuristic applications. (Source: “Microsoft, Intel era at CES gives way to rising star Nvidia,” The Seattle Times, January 1, 2017.)

The week-long trade show, CES, is attended annually by more than 150,000 technologists, marketers, and journalists, and has been focusing on tools that bring new ways to interact with humans or otherwise mimic human intelligence. This year, the spotlight is on NVIDIA, which is good for NVDA stock.

NVIDIA stock appears to have further upside potential as the company stands to gain from upcoming trends. Although the competition is likely to get tougher, NVIDIA has its strengths, which are likely to keep pushing NVIDIA stock higher.


Editor’s Note: Hi, Mukta Samtani here. If you enjoyed this article, you can get more of my opinions and commentaries in our popular daily tech letter, Profit Confidential. Published daily, it’s FREE! Join us when you click here now.