Nvidia (NASDAQ:NVDA) shares have been on a tear in 2021. Last year was a great one for investors in this company. Despite the pandemic and its disruption, they saw a return of 120%. In 2021 — despite challenges like worsening global chip shortages and efforts to derail its blockbuster $40 billion deal to buy Arm — NVDA stock has grown in value by 128%. And we still have three weeks to go.
You’ll find Nvidia chips in many of the holiday season’s hottest gifts, including gaming laptops and some portable game consoles. Nvidia’s RTX 30 series graphics cards are among the most in-demand gifts.
In fact, it was considered a Black Friday deal this year if you were able to snag one offered at MSRP. No discount, just being able to find one in stock was a stroke of luck.
With all of that said, should you treat your portfolio to Nvidia shares this holiday season? With NVDA stock up 128% so far in 2021, the investment has a high probability of being the gift that keeps giving. Let’s take a closer look.
Nvidia’s Q3 Sets the Stage
Nvidia’s third quarter results are the perfect summary of the year this company has been having. They are validation for my inclusion of Nvidia on my February list of semiconductor stocks to watch.
Nvidia set multiple records in Q3. Revenue of $7.10 billion wasn’t just a record, it shattered the previous year’s quarter, up 50%. Gaming revenue was another record, up 42% YoY to hit $3.22 billion — despite the fact that Nvidia is nowhere near to keeping up with demand for its RTX 30 series graphics cards. Data Center revenue hit a record-setting $2.94 billion, which was an increase of 55% YoY. Adjusted earnings-per-share were $1.17, up 60% compared to last year.
All of these beat Wall Street expectations.
Nvidia also announced it had paid out $100 million in dividends during the quarter and announced a 4 cents per share dividend payable Dec. 23. The icing on the cake? The company beat expectations (again) with a Q4 revenue outlook of approximately $7.40 billion.
Naturally NVDA stock popped the next day.
Analysts Are Bullish on NVDA Stock
It’s tough to find an investment analyst who’s down on Nvidia. Five weeks ago, a Wedbush analyst downgraded NVDA stock to “neutral” after having it at “outperform” for two and a half years. His reasoning? He was actually still bullish about Nvidia’s prospects, but explained: “[w]e simply find ourselves unable to justify lifting our multiple to levels that would continue to justify an outperform.”
That’s about the most guarded “neutral” you can have.
Checking with the Wall Street Journal, NVDA stock earns a consensus “overweight” rating among the analysts being tracked. Just prior to the company’s Nov. 17 third-quarter earnings report, Barron’s published a roundup of recent Nvidia upgrades. Among them, Oppenheimer’s Rick Schafer raised his price target a whopping 50%, from $250 to $350. Susquehanna’s Christopher Rolland upped his price target even further, from $250 to $360.
Rolland reiterated both his “positive” rating and $360 price target after Nvidia’s Q3 report, citing Data Center growth as being a big growth driver for the next quarter.
Bottom Line on NVDA Stock
Nvidia shares closed down 1.85% on Wednesday. That follows shortly after a 4.5% drop the previous Friday. I’m not concerned about that — it was probably just profit taking after NVDA stock closed at an all-time high of $333.76 on Nov. 29. The long-term trend continues to be growth. And strong growth at that.
No stock is bulletproof, and NVDA has felt the effects of sudden changes in the marketplace (like the crypto crash of 2018) before. However, Nvidia has momentum in so many different sectors that pain in one can be shrugged off. This Portfolio Grader “B”-rated stock is a great way to invest in high-tech growth areas including semiconductors, PC gaming, AI, data centers, the metaverse, autonomous driving and more.
— Louis Navellier and the InvestorPlace Research Staff
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Source: Investor Place