Nvidia‘s (NASDAQ:NVDA) stock price has staged a strong comeback, a few days after it moved to a local bear market. NVDA jumped to $210 on Friday, up by 10% from its lowest level this month. It has also formed a highly bullish pattern known as a falling wedge, pointing to more gains ahead.
Nvidia Stock Has Confirmed a Bullish Chart Pattern
Technicals suggest that Nvidia may be on the cusp of more upside in the coming weeks. It has been forming a falling wedge pattern in the past few months.
A wedge pattern consists of two descending, converging trendlines. A bullish breakout typically occurs as the two trendlines approach their point of convergence. Nvidia has now rebounded above the upper line of the wedge.
It also rebounded when it landed at the 200-day moving average. Also, the two lines of the MACD indicator have made a bullish crossover and are pointing upwards.
Therefore, the stock may continue rising as bulls target the year-to-date high of $236. A surge above that level will point to more gains, potentially to $300, which is in line with what analysts predict.
Analysts are Bullish on NVDA Shares
Most analysts tracking the company have a buy rating, with the most optimistic having a target of $500. The bullish case is based on the company’s fundamentals, with its revenue and profitability growing.
Benzinga data shows that analysts expect second-quarter revenue to rise to $91.7 billion. Full-year revenue is projected to reach $392 billion, while earnings per share are expected to increase from $4.77 to $8.97. Nvidia has a long history of beating analysts’ estimates, meaning that its annual revenue may hit $400 billion.
The company has also become highly undervalued, with the forward price-to-earnings ratio coming in at 23.5, lower than the sector median of 25. This multiple is much lower than the five-year average of 43.
Nvidia is facing some challenges, including rising competition from companies like Advanced Micro Devices (NASDAQ:AMD), and even its top clients like Google, Meta, and Microsoft. OpenAI recently unveiled the chip it built in collaboration with Broadcom (NASDAQ:AVGO).
Nonetheless, it is in a pole position in the GPU industry, with demand for its GPUs continuing to rise. Also, the company has expanded to other areas such as in the CPU industry, where it will see incremental revenue growth in the future.
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