Bull of the Day: Nvidia (NVDA)

Earnings season has been pretty dicey for most companies, but the tech sector has been the exception. Companies here have managed to blow by expectations and post solid guidance, something that has been in stark contrast to many in the industrial or consumer segments. But while most investors have focused in on giants like Google or Amazon, chip stocks like Nvidia (NVDA - Analyst Report) have also posted good numbers too.

But can this trend continue heading into 2016? That is obviously the most important question for investors right now and it might be a good idea to look to recent earnings estimate revisions for some help on this front.In fact, NVDA just crushed earnings expectations for its most recent quarter, posting EPS of 40 cents a share compared to an estimate of just 25 cents per share. This follows up another tremendous beat for the company—NVDA beat by 136% in the previous quarter—and it shows us that this stock has been on fire as of late.

Recent Estimates

Thanks to the earnings beat and solid guidance in terms of revenues, analysts have been raising their estimates for NVDA stock as of late. Eleven estimates for the current year have gone higher for NVDA’s EPS estimate in the past seven days while zero have gone lower, and we have seen a similar trend for the next year time frame too.

The increases have been pretty solid too, suggesting that analysts believe good things are ahead for NVDA stock. The current year estimate has surged by 31% basically since the earnings report, while the following year consensus estimate has surged by 14.4% as well. Clearly, analysts expect great things of NVDA in the near future as strong demand continues for their high performance chips, and for cloud-based solutions which is becoming a key area in the computing world.

For these reasons, it should be pretty clear why NVDA has earned itself a Zacks Rank #1 (Strong Buy) and that we are looking for more outperformance from this security in the near term. Yes, shares have already moved higher, but with these kind of estimate increases there is plenty still to like about Nvidia stock.

Bottom Line

Investors should also note that the semiconductor- general segment is in the top 5% of all segments we track. So, not only is NVDA primed for outperformance, but there is a pretty solid underlying trend in the space too.

This could make NVDA an overlooked but good choice for investors in the tech world, and one that goes beyond the giants of Microsoft or Apple. So give this top ranked stock a closer look as it may be one of your best technology bets this holiday season.

by Eric Dutram

Source: http://www.zacks.com/commentary/62341/bull-of-the-day-nvidia-nvda