As of this writing, Nvidia (NASDAQ:NVDA) is no longer pulling back as strongly as it was during the late July/early August AI stock pullback. Even so, pessimism for Nvidia stock remains at elevated levels. Fear and uncertainty continue to weigh on the AI chip leader’s shares.
Chalk this up to both macro and company-specific developments that some perceive to be signs of further disappointment and lower prices ahead for shares. However, while the fearsome anticipate a dip, you may be better off “buying the dip” with NVDA.
What may be transpiring now could soon prove to be the peak of short-lived pessimism. At the end of this month, the company will release its fiscal results for the preceding quarter.
Much as has happened with another much-followed AI stock that has already started to make a recovery, Nvidia too may be just weeks away from a comeback as well. Hence, if you go against the grain today, your decision to do so could prove shrewd in hindsight.
Why Investors are Still Souring on Nvidia Stock
There are two key reasons negativity continues to persist for NVDA shares. First, the worries that triggered the AI stock sell-off last month have not completely gone away.
There are still lingering concerns that Big Tech’s massive investment in building out its AI infrastructure will soon slow down.
Bringing Nvidia’s revenue and earnings growth winning streak to a screeching halt.
Second, irrespective of whether the AI boom continues, there are now also concerns that other factors will weigh on the company’s fiscal performance in the quarters ahead. Namely, concerns that a design flaw will delay the rollout of the company’s Blackwell chip series.
Taking both these reasons into account, it’s no surprise that Nvidia stock is not only failing to bounce back, but may not necessarily be finding support at present price levels.
Trading for around $105 per share right now, a dip to sub-$100 per share levels may be within the realm of possibility in the immediate term.
Again though, new and existing NVDA investors may want to hold on. In a matter of weeks, current pessimism could prove to be simply a “darkest before the dawn” type situation.
Poised for a Post-Earnings Comeback?
As Nvidia operates using an alternative fiscal year that ends in January, the company’s earnings releases are well after those of its competitors.
While other “Mag 7” names have already reported their latest results, the next earnings release for Nvidia stock is scheduled to happen a little over two weeks from now, post-market on Aug. 28.
Starting on this date, shares may be poised to begin a post-earnings comeback. Despite the pessimism, it should be noted that analyst expectations about Nvidia’s latest quarterly results have kept rising.
This, coupled with the company’s steady streak of revenue and earnings beats over the past few quarters, points to yet another quarterly beat ahead.
That’s not all. Updates to guidance could assuage concerns about both the reported Blackwell chip delay, and fears of a slowdown in AI infrastructure spending. The company could also provide further updates regarding its rollout of AI-PC chips.
Not that NVDA will immediately climb back to its all-time split-adjusted high of $140.76 per share. However, it may just well get the ball rolling, for a return to higher prices, en route to new highs.
The Verdict: Pounce on Pre-Earnings Weakness
As we discussed in our last NVDA article, forget about shares merely climbing back above $140 per share. A move to prices north of $200 per share could happen sooner than you think.
In the coming fiscal year, earnings could climb from $2.72 to $3.72 per share. Perhaps, even to around $5 per share, according to some sell-side forecasts.
That’s an up to 83.8% increase compared to the current fiscal year ending January 2025. Even if shares experience some multiple compression, this might drive another wave of big gains for NVDA shares over the next twelve months.
With this in mind, if you already own Nvidia stock, you may want to do more than just hold on ahead of the late August earnings release. You may also want to increase your exposure, especially if shares dip down to double-digit price levels.
Nvidia stock earns an A rating in Portfolio Grader.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place