By Mukta Samtani, MBA, PhD

Published: December 28, 2016

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Mukta Samtani, MBA, PhD
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NVIDIA Corporation: Why NVIDIA Stock Is Breaking All Records

Nvidia stockCan NVDA Stock Continue Its Gains?  

NVIDIA Corporation (NASDAQ:NVDA) stock is on fire. It’s one of the best-performing stocks in the NASDAQ 100 index in 2016. Nvidia stock went up by almost seven percent in its last trading session, and the stock has posted an incredible gain of more than 250% year-to-date.

NVDA stock has been marching ahead, following its impressive third-quarter earnings report, which was released in November. The company reported record revenues of $2.0 billion, up 54% from a year ago. Nvidia stock had touched its all-time high after the company shocked investors with its earnings beat.

Nvidia Corporation’s new initiatives in deep learning, virtual reality (VR), data centers, cloud services, and driverless cars have resulted in the company’s biggest sales growth in six years.

Much of the growth came from the company’s new “Pascal” graphics processing unit (GPU) chips. As chief executive officer Jen-Hsun Huang explained, the chips, “are fully ramped and enjoying great success in gaming, VR, self-driving cars and datacenter AI computing.” (Source: “NVIDIA Announces Financial Results for Third Quarter Fiscal 2017,” Nvidia Corporation, November 10, 2016.)

Huang added that Nvidia’s GPU deep learning platform runs every artificial intelligence (AI) framework, and is available in cloud services from Amazon.com, Inc. (NASDAQ:AMZN), International Business Machines Corp. (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), and Alibaba Group Holding Ltd (NYSE:BABA). It is also found in servers from every original equipment manufacturer (OEM). (Source: Ibid.)

Analysts have been quite bullish on the new opportunities for Nvidia Corporation. NVIDIA stock is trading near its 52-week high of $117.36, and is set to go higher.

Goldman Sachs Group Inc (NYSE:GS) added Nvidia to its “Conviction Buy” list last week. The firm believes that NVDA stock will continue its rally next year, and predicts that earnings will top expectations next year, due to new market opportunities.  
Goldman Sachs analyst Toshiya Hari said, “We continue to view NVDA as a unique growth story in semis, levered to positive secular trends in gaming, VR (virtual reality), AI (artificial intelligence)/ML (machine learning) and automotive.” (Source: “Nvidia shares, which have tripled in 2016, will keep rallying next year, Goldman Sachs says,” CNBC, December 20, 2016.)

About two weeks back, NVIDIA stock touched a record high following a bullish analyst note from Evercore ISI Institutional Equities. Evercore analyst C.J. Muse upgraded the stock to “buy” and boosted his price target to $120.00. Muse believes that the focus on semiconductors is shifting away from consumer applications of chips toward auto/industrial, data centers, and the “Internet of Things” (IoT). (Source: “Nvidia, Xilinx Tops as SOX Heads to $1,000, Says Evercore IS,” Barron’s, December 14, 2016.)

The company’s exceptional growth has got both investors and analysts excited. Nvidia is poised to benefit from the wave of innovations that will mark the next era of computing. NVDA stock has gone up by about 255% in the past year, while the S&P 500 only went up by 12.5%.