NVIDIA Corp.’s (NVDA) stock has plunged 30% since reaching an all-time high this month. If that weren’t enough, now the stock is facing a further 11% decline, according to technical analysis. Should that happen, the stock would be down by more than 39% just this month, a loss in market value of about $55 billion and one of the steepest tech stock.
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NVIDIA is still expensive when compared to many other chip stocks. Even with the steep decline, it’s trading at almost double the average one-year forward PE Ratio of the top 25 companies in the iShares PHLX Semiconductor ETF (SOXX).
The chart shows that the stock is trading around a technical support level of $198.25. Should the stock stay at or below this point, it may drop to $179.50 from its current price of $201.16. The relative strength index has been trending lower since peaking at an overbought level of 90. Currently, the RSI shows no sign that this bearish trend will reverse. Volume levels have also surged as the stock price has declined, which indicates the number of sellers has been increasing.
As indicated, NVIDIA’s stock is still trading at lofty levels compared to many chip companies. The stock is currently trading at a fiscal 2020 PE ratio of 22.7. The average one-year forward PE ratio of the top 25 holdings in the iShares Semiconductor ETF is 12.5. NVIDIA is currently the second most expensive stock in the group. Only Advanced Micro Devices Inc. (AMD) has a higher valuation at 28, and the stock has fallen by more than 46% from 2018 highs.
Lofty Price Targets
Analysts, nonetheless, see NVIDIA rising 44% to a price target of $287, just below its record high. Given the steep declines and re-valuation of the chip sector, that price may fall.
Analysts’ current forecasts may be too optimistic despite the stock’s huge downdraft. They have not reduced their revenue or earnings expectations for the fiscal third quarter, and are looking for revenue growth of 23% and earnings growth of 45%. However, given the recent weakness among chip companies that have reported results, those estimates may also come down. That could mean further stock declines for Nvidia.
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How Nvidia, Google and Others Will Make Autonomous Driving a Reality Simulation is the key to acceleration the safety and the arrival of autonomous driving.
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It’s time to face the facts about autonomous driving. There are simply too many auto-related deaths that occur for us to not find a solution. I hope that when we look back 30 or 40 years from now, we wonder how society ever functioned with numbers like this. In the U.S. alone, 37,000 people die each year in auto-related accidents.
That’s more than 100 people a day and way too many of us — friends, family and colleagues — have been impacted by the split-second, life-altering results of a car accident. Not every accident spells doom, but even beyond those 37,000 fatalities, consider all of the people that are paralyzed, injured and/or put out of work after a car accident.
The results are simply unacceptable and everyone from the Big Three to Silicon Valley is here to help solve it. While companies like Ford Motor (F – Get Report) , General Motors (GM – Get Report) , Alphabet (GOOGL – Get Report) via Waymo, Nvidia (NVDA – Get Report) , Tesla (TSLA – Get Report) and others are working on autonomous driving technology, a wave of optimism is starting to show light at the end of the tunnel.
Simulation is something that Nvidia has talked about quite a bit and is something that Waymo has implemented as a means to accelerating the development of its autonomous driving systems. The difference between simulated testing and real-world testing is obvious: The former is done using software and virtual environments, while the latter involves a real-life car driving on real roads in the real world. To get autonomous driving right, both are necessary.