After 5% Rise In A Week, What’s Next For Nvidia Stock?

by Trefis Team
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Nvidia stock (NASDAQ: NVDA) has seen an impressive rise of 5% over the past week and currently trades at $206 per share. This rally was driven by expectations of strong earnings growth in the company’s upcoming Q2 2022 results, expected later this month. For Q1 2022, Nvidia posted stellar revenue growth, with revenue rising to $5.66 billion from $3.08 billion in Q1 2021, which helped drive the company’s net income to $1.91 billion from $917 million over this period. The strong jump in earnings came due to a combination of shrewd expense control and a slightly lower effective tax rate.

After the recent rally, will Nvidia stock continue its upward trajectory over the coming weeks, or is a correction in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for Nvidia stock average close to 2.1% in the next one-month (21 trading days) period after experiencing a 5% rise over the previous one week (five trading days) period. But how would these numbers change if you are interested in holding Nvidia stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test Nvidia stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF Nvidia stock moved by -5% over five trading days, THEN over the next 21 trading days, Nvidia stock moves an average of 4.6 percent, with a strong 66.3% probability of a positive return.

Some Fun Scenarios, FAQs & Making Sense of Nvidia Stock Movements:

Question 1: Is the average return for Nvidia stock higher after a drop?

Answer:

Consider two situations,

Case 1: Nvidia stock drops by -5% or more in a week

Case 2: Nvidia stock rises by 5% or more in a week

Is the average return for Nvidia stock higher over the subsequent month after Case 1 or Case 2?

Nvidia stock fares better after Case 1, with an average return of 4.5% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.1% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how Nvidia stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Nvidia stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For Nvidia stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

Nvidia’s returns over the next N days after a 5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

It’s pretty powerful to test the trend for yourself for Nvidia stock by changing the inputs in the charts above.

While Nvidia stock could see further upside, it is helpful to know how its peers stack up. Nvidia Comparison With Peers summarizes how Nvidia compares against peers on metrics that matter. You can find more such useful comparisons on Peer Comparisons.

 

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