NVIDIA shares rose 0.2% in premarket trading on Tuesday, attempting to recover after a 6.9% decline over the previous five sessions. Last week, the stock briefly surpassed the $200 threshold during a semiconductor sector rally but failed to hold it.
After moving above its months-long trading range, NVIDIA shares pulled back. Investors are now considering whether a sustained rally will depend on the company’s earnings report scheduled for May 20. FactSet reports the current average analyst price target is $269.82. This implies analysts expect the stock to rise 34.9% from the recent $200 level, reflecting the belief among many on Wall Street that NVIDIA trades below fair value.
The chief investment officer at New Age Alpha said NVIDIA is at least fairly valued or possibly undervalued. He noted that the company has posted twelve consecutive quarters of strong revenue growth. Continued rapid growth in AI demand supports this view. Many institutions also agree that NVIDIA has a strong advantage in the AI accelerator hardware market, despite short-term stock price volatility.
Fresh evidence of sustained AI chip demand. On Tuesday, Foxconn, NVIDIA’s main AI server production partner, provided more proof of strong demand for AI chips. The Taiwanese company, also known as Hon Hai Precision Industry, reported a 30% increase in revenue for April compared to last year. This growth came from its cloud and networking products, which have now become Foxconn’s biggest business, overtaking its older consumer electronics segment. Foxconn also said it expects AI rack production to keep growing through the second quarter, even though the broader tech industry usually slows down at this time of year.
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