Nvidia stock price forecast: double-top forms amid strong earnings

The Nvidia (NASDAQ: NVDA) stock price popped by almost 3% in extended hours after the technology company published strong quarterly results. The stock rose to $194 bringing its total market capitalisation to more than $474 billion.

Nvidia earnings review

Nvidia, the fast-growing graphical processing unit (GPU) company, announced impressive quarterly results after the regular session on Wednesday. 

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The firm reported a record revenue of more than $6.5 billion, which was about 68% from the same period a year earlier. The strong year-on-year comparison was mostly because of the fact that the firm sold less products in the second quarter of 2020 as the economy locked up. Its diluted earnings per share rose by 276% to $0.94. 

By segment, the company’s gaming revenue rose by 85% to more than $3 billion while its data center revenue rose by 35% to $2.37 billion. In total, the firm’s total net income rose from $1.92 billion in the first quarter to more than $2.374 billion.

Analysts were expecting that the firm would report relatively weak quarterly results mostly because of the cryptocurrencies industry. In the second quarter, the prices of most cryptocurrencies declined sharply as China intensified its pressure on miners. Bitcoin is an important part of Nvidia’s business model because its GPUs are the most popular by miners.

The Nvidia stock price also rose after the company delivered an update on Arm Holdings. In a statement, the firm’s Chief Executive said that the regulatory approval process could take longer than expected. He lamented that some Arm licensees had objected to the deal. He said:

“We are confident in the deal and that regulators should recognize the benefits of the acquisition to the arm is licenses and the industry.”

Most analysts believe that the Nvidia stock will likely keep rising in the near term. Analysts at Evercore ISI, Wells Fargo, UBS, and Rosenblatt Securities have a target of more than $200.

Nvidia stock price forecast

The daily chart shows that the NVDA stock has done relatively well in the past few months. It rose to a post-split high of $208 and formed a small double-top pattern whose neckline is at $180. 

On the daily chart, the stock declined below the 50-day and 25-day weighted moving averages (WMA) while the MACD has dropped below the neutral level. 

Therefore, while the Nvidia stock popped after earnings, there is a possibility that it will make a short-term pullback in the near term.

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