Wells Fargo (NYSE:WFC) Announces Double Upgrade For NVIDIA Corporation (NASDAQ:NVDA)

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It's no secret that computer graphics and gaming have become a huge market driver, and they are only becoming more prominent over time. It should then come as no surprise that when NVIDIA Corporation (NASDAQ:NVDA) announced a major breakthrough in Graphics Processing Unit (GPU) technology it would create a major buzz. In fact, it caught the attention of Wells Fargo & Co (NYSE:WFC) who had previously rated NVIDIA Corporation (NASDAQ:NVDA) stock as underperform and had a price target set far lower than the current 258 USD price tag. Wells Fargo & Co (NYSE:WFC) did a complete 180 and issued a rare double upgrade for NVIDIA Corporation (NASDAQ:NVDA) stock, setting their new price target to 315 USD per share, the previous price target was 140 USD. 

Is a Double Upgrade for NVIDIA (NASDAQ:NVDA) Justified?

On the surface that may seem a tad ridiculous, but this upgrade could be justified. The company has seen steadily increasing revenue and lowered expenses over time, yet the rate of investment has declined simultaneously. NVIDIA Corporation (NASDAQ:NVDA) stock price has been in a consistent uptrend for well over five years, however momentum over the last 2 years or so has been declining. While the fundamentals look great overall, a lot of the slowdown in growth can be attributed to the fact the stock is expensive. In fact, there seems to be a direct correlation to the lagging uptrend in price and the increasing downtrend in overall investments.

[chart-id=605

Gross profits correlate with stock price


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One thing lacking for NVIDIA Corporation (NASDAQ:NVDA) was a new strong catalyst for growth. The new GPU architecture "turing" may be that catalyst that inspires fresh growth in the chart, at least Wells Fargo & Co (NYSE:WFC) seems to think so. NVIDIA Corporation (NASDAQ:NVDA) has touted the aptly named "Turing" GPU tech as the biggest development for graphics since the release of the CUDA architecture. "Turing is NVIDIA's most important innovation in computer graphics in more than a decade," said Nvidia CEO and founder Jensen Huang. The eight-gen tech is slated to take graphics to the next level, and if they can deliver on their promises, which are already being hyped beyond belief around the sector, Wells Fargo & Co (NYSE:WFC) new price target is well justified and may even be underrating the stock.

NVIDIA Corporation (NASDAQ:NVDA) releases it's earnings August 16th and the price has taken a small dive in anticipation of lower than expected returns. This hasn't hampered the optimism of traditional analysts, though an air of caution is advised. Graphics cards with the new chips in them won't be available until the 4th quarter of 2018 and even then they will be solely relegated to workstation units. It will be some time before the general market and gaming, in particular, can take advantage of the new GPU tech. There is the danger of a temporary reversal to the downside if NVIDIA Corporation (NASDAQ:NVDA) underwhelms in its earnings report, in addition, they are facing increased pressure and competition from Advanced Micro Devices, Inc. (NASDAQ:AMD).



Comments (6)

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If AMD didn't get hurt by the fall of crypto, why would it hurt NVDA

   0   Reply (0)   Follow(437)  

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    Broader market up big and this thing lower right before earnings? Something got leaked

       0   Reply (0)   Follow(437)  

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      • 3Kings
      • ,  Contributor
      • 16 August 2018, 11:08 am

      May NVDA deliver a 14th consecutive earnings beat and raise!

         0   Reply (0)   Follow(437)  

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        Three knockout punches will send the stock to $300 (1) Siggraph event (2) blow-out earning today (3) introduction of new GEForce card next week on the 20th

           0   Reply (0)   Follow(437)  

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          • John R
          • ,  Contributor
          • 16 August 2018, 10:08 am

          Not sure i trust WFC

             0   Reply (0)   Follow(437)  

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            this company is cutting edge. The share price will continue to reflect that. most people probably don\'t realize that aside from the obvious GPUs ai self driving cars, what they are doing with companies like Pixar making major motion films. real time Ray

               0   Reply (0)   Follow(437)  

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