NVIDIA stock price has rebounded in the past few weeks and is now slowly approaching the all-time high.
It was trading at $200 on Wednesday, up sharply from the year-to-date low of $163. This article explores some key reasons why it may soon surge to $250.
NVIDIA stock price technical analysis points to more gains
The first main reason why the NVDA stock price is about to surge is that it has strong technicals.
The daily timeframe chart shows that the stock has formed a descending channel and is now in its upper side.
This channel started forming after the stock went parabolic, moving from a low of $86 in April last year to a record high of $212.
As such, this pattern is part of the bullish flag pattern, which often leads to more gains.
The stock has moved slightly above all moving averages and the Supertrend indicator, a sign that bulls are in control.
Also, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued to point upwards.
Therefore, the most likely scenario is where it stages a strong comeback and moves to a record high of $212.
Moving above that level will lead to the Fear of Missing Out (FOMO), which will lead to more gains, potentially to $250.
NVDA stock chart | Source: TradingView
NVIDIA is a highly undervalued company
There are signs that NVIDIA is one of the cheapest companies in the United States despite having some of the best growth metrics.
A good example of this is to compare it with Tesla, a company that operates in a highly competitive industry and one whose sales are falling.
It recently delivered a weak Q1 delivery report, yet it has a forward price-to-earnings ratio of nearly 200.
NVIDIA, on the other hand, is experiencing quarterly growth rates of over 50%. Analysts expect the upcoming results to show that its revenue grew by 78% in the first quarter to $78 billion.
The company also expects to have over $1 trillion sales through 2027. Most notably, it is one of the most profitable, with its net profit margin rising to 54%.
Despite these metrics, the company has a forward P/E ratio of 24, slightly above that of the S&P 500 Index.
Its multiple is also much lower than that of Tesla and other companies like Microsoft and Amazon.
The cheap multiple is likely because of the fear that the AI bubble is about to pop.
Also, investors are likely worried about the rising competition from its clients who are building ASIC chips.
Still, chances are that NVIDIA will maintain its market share as its chips will be superior over time.
NVIDIA has other bullish catalysts
The NVDA stock price will surge because of other potential catalysts.
First, some of its top investments like Intel, Lumentum, CoreWeave, and Nebius are doing well.
Intel stock has jumpedto a record high, making it one of NVIDIA’s best investments.
Second, Donald Trump is expected to travel to China in May and chances are that NVIDIA will be on the agenda.
If the company starts selling its chips to China, chances are that it will be making over $4 billion annually.
Additionally, Wall Street analysts are bullish on the stock, with the most bullish analyst predicting that it will jump to $400. Even the most pessimistic expects it to rise to 205.
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