Nvidia Corp.’s (NVDA) stock has soared over the past few months, significantly outperforming the S&P 500 and rising by approximately 135.3% in comparison to the S&P’s gain of about 3.7%. Hedge funds and institutions were both actively buying the stock in the first quarter, resulting in this technology company being added to the WhaleWisdom WhaleIndex on May 18, 2020.
Nvidia is a multinational technology company and the inventor of the graphics processing unit (GPU), a chip that’s popular in both gaming and professional markets. The company’s product line generates graphics on everything from business workstations and personal computers to mobile devices. While Nvidia saw a dip in performance in March and early April related to the coronavirus pandemic, the company has emerged stronger and has even started to utilize its GPU technology to assist research analysis on the coronavirus.
Hedge Funds and Institutions Are Active
Nvidia has received positive attention from both hedge funds and institutions and has been added to the WhaleWisdom WhaleIndex. Hedge funds increased their aggregate 13F shares held to approximately 166.2 million from about 151.1 million. Of hedge funds, 71 created new positions, 117 added to an existing one, 39 closed out their holdings, and 107 have exited. Institutions increased their aggregate holdings to about 422.4 million from 407.5 million.
Encouraging Multi-year Estimates
Analysts expect to see earnings rise over the next three years, with increases in growth from 2021 to 2023 spanning from approximately 40.7% to 20.3%. These year-over-year estimated increases could bring earnings to $9.87 per share in 2022, up from $8.15 for 2021. The company will report its second-quarter 2021 results on August 19, 2020. Analysts estimate the company earned $1.97 per share, on revenue of $3.65 billion.
Analysts See Growth Potential
Rosenblatt Securities maintains a Buy rating on Nvidia, recognizing the potential for growth in gaming and data center niches. Nvidia is actively trying to acquire control over ARM Holdings from Softbank, which may bring along opportunities to increase Nvidia’s overall value. Cowen & Co.’s analyst, Matt Ramsay, views the datacenter as Nvidia’s largest franchise, with the potential for increased revenue in 2021. Cowen maintains an Outperform rating on the stock. However, Morgan Stanley’s analyst, Joseph Moore, recently expressed some uncertainty over the deal to acquire a majority position of ARM Holdings and maintains Nvidia’s stock at a market weight position.
The future holds promise for Nvidia, as the company continues to weather the pandemic and maintain positive momentum. With primarily favorable estimates from analysts, along with institutions and hedge funds buying, other investors have good reason to remain optimistic.