Nvidia’s (NVDA) stock saw growth in the past year, as hedge funds were actively buying. The company outperformed the S&P 500, rising by approximately 174.3% compared to the S&P’s gain of about 29.1%. Despite a solid performance, Nvidia experienced a disappointing decline on the WhaleWisdom Heatmap to a ranking of 46, down from 4.
Nvidia sells graphics processing units (GPUs) that act as accelerators for CPUs. Nvidia specializes in products for gaming, data centers, professional visualization, and automotive platforms. Nvidia saw varying demand changes across its platforms with a boom in the gaming market. At the same time, the data center sales fell flat. Its professional visualization segment has also seen slow growth. Nvidia’s GPU-accelerated computing platform gives data centers added power needed for endeavors such as high-performance computing and artificial intelligence. However, one of Nvidia’s challenges is a supply chain shortage due to the global microchip storage, negatively impacting GPUs and autonomous driving technology.
Hedge Funds and Institutions Are Buying
Nvidia has seen positive fourth-quarter activity from both hedge funds and institutions. Hedge funds increased their aggregate 13F shares held to approximately 73.4 million from about 72.9 million. Of hedge funds, 51 created new positions, 154 added to existing holdings, 27 exited, and 143 reduced their stakes. Institutions increased their aggregate holdings to about 413.1 million from 408.0 million.
Encouraging Revenue Estimates
Analysts expect to see year-over-year revenue growth from 2022 through 2024, of 10.9% to 34.5%. Between January 2022 and 2024, revenue is anticipated to grow to approximately $28.2 billion from $22.4 billion. Earnings estimates are expected to increase to $17.43 per share in 2024, up from a 2022 estimate of $13.55.
Analysts are optimistic about the stock and raising price targets. Rosenblatt Securities raised Nvidia’s price target to $800 from $700. They maintained a Buy rating, noting its strength across all segments and optimistic revenue predictions. Deutsche Bank raised its priced target to $575 from $560, citing great opportunities for the business. Cowen, Inc. also raised price targets to $675 from $665. Cowen was encouraged by Nvidia’s proposed acquisition of Arm Ltd., a semiconductor and software design company. Analyst Chris Caso from Raymond James & Assoc., Inc. is optimistic in both the long and short term and upgraded Nvidia to a Strong Buy while raising the price target to $750 from $700.
Nvidia’s impressive 2020 and 2021 year-to-date growth is certainly encouraging for investors, and multi-year estimates speak to the stock’s potential. These estimates are favorable for long-term growth, especially given the lasting popularity of the gaming market for which Nvidia provides graphic cards. Analysts’ ratings and outlooks present an attractive opportunity for investors.