Nvidia Corp. (NVDA) continues to navigate market volatility, keeping pace with the S&P 500’s performance with an overall decline of about 10% as of August 18, 2022, over the past year. Hedge funds were actively selling the technology stock in the second quarter, influenced by financial updates. However, Nvidia still rose on the WhaleWisdom Heatmap to a rank of one from nineteen.
Nvidia provides graphics, computing, and networking solutions globally across gaming, data center, automotive, and professional visualization markets. The company operates through two segments: Graphics Processing Unit (GPU) and Tegra. The GPU business is tied closely to gaming, autonomous vehicles, and data visualization tools, with GPUs for data centers in demand by cloud platforms. The Tegra segment includes Tegra processor technologies developed for smartphones, gaming devices, and other computing devices such as tablets and Chromebooks. Nvidia’s GPU segment generates the bulk of its revenue, and the company uses a platform business strategy to combine its hardware with software to enhance GPU capabilities.
Hedge Funds and Institutions Sell
Hedge Funds adjusted their portfolios in the second quarter, and the aggregate 13F shares held decreased to approximately 203.9 million from 221.0 million, a slide of about 7.7%. Overall, 26 hedge funds created new positions, 195 added, 69 exited, and 180 reduced their stakes. Institutions also sold and lowered their holdings by about 2.3% to $1.5 billion.
Encouraging Multi-year Estimates
Analysts expect to see earnings rise over the next two years, with increased growth that could bring earnings to $5.56 per share by January 2024, up from $3.74 in 2023. Revenue is predicted to increase to approximately $29.3 billion by January 2023 and $35.9 billion by January 2024. Long-term 13F metrics between 2018 and 2022 suggest that Nvidia’s investment potential remains strong.
Analysts Pull Price Targets
Earlier in August, Nvidia shared second-quarter revenue figures that failed to meet original projections due to weaker revenue from their gaming business. Despite the long-term revenue potential, the disappointing announcement caused analysts to pull price targets on the stock. William Stein of Truist Securities lowered the firm’s price target on Nvidia to $216 from $283 while maintaining a Buy rating on shares. Susquehanna Financial Group analyst Christopher Rolland held a Positive rating on the stock and lowered the firm’s price target to $210 from $220. Rolland shared that the company’s preannouncement included a plan to slow operating expense growth to balance their investments in the long-term, and the disappointing projected results may support the weakening of personal computer and device end markets. Analyst Kinngai Chan of Summit Insights kept a Hold rating on shares after Nvidia’s negative second quarter announcement. Chan cited concerns about supply chain delays and a recently declining cryptocurrency mining market. Due to rising energy prices and falling crypto prices, GPU mining has been less profitable. Vijay Rakesh of Mizuho Securities Co. maintained a Buy rating on shares and lowered the firm’s price target on Nvidia to $250 from $290 following Nvidia’s revenue preannouncement.
Nvidia has made great strides with GPU technology and artificial intelligence; however, the company’s growth remains stalled as it continues to weather challenging macroeconomic conditions. Investors may be encouraged by analysts’ positive earnings and revenue projections through 2024. The technology stock is one to watch, holding long-term potential for patient investors.