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Why NVIDIA Stock is a Buy After Investor Day

Wednesday, April 14, 2021 | Sean Sechler
Why NVIDIA Stock is a Buy After Investor DayIt’s safe to say that NVIDIA (NASDAQ:NVDA) just had a very successful investor day given the price action of the stock following the event. Investor days can be hit or miss for companies depending on what their respective management teams have planned and the market’s overall reception of the proceedings. Also known as analyst days, investor days are public meetings where presentations are made by the CEO of the company along with other executives in front of a live audience. They provide publicly traded companies with the opportunity to update investors on the direction of the company, deliver good news, and provide insight into the company’s strategy and culture.

Sometimes, a company has an investor day that sends the stock rallying like we are seeing here. This could be a sign of good things to come, especially given some of the announcements that were made during the event. Let’s discuss a few reasons why NVIDIA stock is a strong buy after its investor day below.

Announced New Data-Center CPU

NVIDIA is a leading semiconductor company that develops and markets graphics and mobile processors for computers, workstations, and wireless devices like tablets and phones. One of the biggest headlines from the company’s investor day was the announcement of a new chip that could mean big trouble for the likes of competitors such as Intel and AMD. NVIDIA’s Grace CPU will target the data center market and can deliver 10x performance gains on servers that are handling complex AI and high-performance computing workloads. That means these chips will likely be very popular for research firms that are building supercomputers and could be one of the final keys to unlocking the full potential of artificial intelligence.

Last year, NVIDIA earned a record $6.7 billion in data center revenue and this move should only help to strengthen the company’s position in that market. Investors should also be excited by the fact that NVIDIA’s data center business is growing at a rapid pace, as its FY 2021 data center revenue was up 124% year-over-year. Some of the companies that can use NVIDIA’s newest chip include huge cloud vendors like Amazon, Microsoft, and Alphabet, which gives investors a good idea about just how big this news is.

First Quarter Fiscal 2022 Revenue Tracking Above Outlook

We know that semiconductors are in high demand at this time given the massive global shortage of these essential chips. This is a big reason why investors should be looking at semiconductor stocks at this time, as demand is expected to exceed supply for the majority of this year. While NVIDIA had a very impressive Fiscal 2021 last year and reported record revenue of $16.68 billion, up 53% year-over-year, Fiscal 2022 could be even better given the company’s momentum and the chip shortage.

During the company’s investor day, NVIDIA reported that its Q1 Fiscal 2022 revenue is tracking higher above its previously announced outlook. This essentially means that the company anticipates it will beat its forward guidance and deliver strong earnings results, as the company’s Q1 total revenue is tracking over the $5.3 billion estimates from February. This is largely driven by strength across all of the company’s end markets, which is a great reason to consider adding shares at this time.

New All-Time Highs

Another strong reason to consider adding shares of NVIDIA at this time is the fact that the stock hasn’t done much over the past year until now. From a technical standpoint, it has been trading sideways for months and has just broken out from a long period of consolidation thanks to the recent investor day. A classic saying for traders and investors to keep in mind is “the bigger the base, the bigger the breakout”, which very well might apply to this stock.

It seems that NVIDIA just needed a strong catalyst to break out to new highs, which is why it could be a great time to add shares now that the stock is moving again. While it might seem counterintuitive to purchase shares of a company at all-time highs, it’s important to understand that there isn’t any overhead resistance in those types of scenarios. The stock is in “price discovery” mode and could continue rallying for many sessions ahead. The bottom line here is that the current strength in NVIDIA should not be ignored and the stock is behaving well from a technical analysis standpoint, another great reason to consider adding shares.

NVIDIA is a part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and run by entrepreneurs.

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
NVIDIA (NVDA)2.3$550.34-3.8%0.12%90.07Buy$613.08
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