Chipmaker Nvidia (NVDA) has surged 84% in under four months to briefly reclaim its position as the world’s most valuable company. As a result, analysts have taken notice, although some are telling investors to be cautious. Indeed, Jonathan Krinsky of BTIG pointed out that Nvidia’s 14-day relative strength index topped 80 on Friday, which is a level that suggests a stock is overbought. He warned that while this doesn’t necessarily mean a pullback is imminent, it does mean that investor sentiment might be overheating. Still, Nvidia’s rally has been supported by strong tailwinds, including a U.S. policy reversal that allows the company to resume certain AI chip sales to China.
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According to Bloomberg, this move could help Nvidia recover a large part of the $15 billion in data center revenue that was previously at risk for Fiscal Year 2026. Nevertheless, some investors are trimming their positions. For example, James Abate of Horizon Investments has sold some shares due to Nvidia’s rising valuation. He is also worried that the market may be underestimating how cyclical the AI business could become. Interestingly, Nvidia is currently trading at about 34 times its expected earnings over the next 12 months, up from below 20 in April but still under its five-year average of 40.
While these multiples aren’t unusual for a high-growth tech firm, they do raise questions about how much future success is already priced in. As a result, investors will be closely watching the upcoming earnings reports from tech giants that heavily influence Nvidia’s bottom line. These include Alphabet (GOOGL), which is set to report on July 23, followed by Microsoft (MSFT) and Meta (META) on July 30. It is worth noting that together with Amazon (AMZN), these companies make up more than 40% of Nvidia’s revenue.
What Is a Good Price for NVDA?
Turning to Wall Street, analysts have a Strong Buy consensus rating on NVDA stock based on 34 Buys, three Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average NVDA price target of $182.06 per share implies 5.5% upside potential.
