NVDA: Recent Rally Makes Nvidia Stock A Better Buy Down The Road

Nvidia (NASDAQ:NVDA) shares have rallied in the past week. The NVDA stock price gained 8.3% rose to $164.16 a share last week, fueled mostly by positive coverage from Wedbush’s Matthew Bryson. He gave the stock a $184 price target, believing Nvidia to have “strong growth prospects in numerous attractive end markets”.

Recent Rally Makes Nvidia Stock A Better Buy Down The Road

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And while the NVDA stock valuation has increased — it’s still cheaper than Advanced Micro Devices (NASDAQ: AMD) stock — high expectations continue to be priced into Nvidia shares. The company has positive investor sentiment on it side. But Nvidia’s stock price could stumble again on negative catalysts like a breakdown of U.S.-China trade talks or weak quarterly earnings report.

Progress Made In US-China Trade Talks

Over the weekend, President Trump and Chinese President Xi Jinping agreed to restart trade talks. While The U.S. will continue charging existing tariffs on Chinese imports as the trade talks resume, future tariffs are off the table.

However, we are not out of the woods just yet: Bloomberg reported that Chinese economic advisor Zhu Ning said that this “trade truce” does not make a final deal any more likely.

Chipmakers such as Nvidia have a lot to lose if the trade battle escalates. Nvidia’s stock price is vulnerable to any negative trade talk news. Even worse would be the tremendous downside in the event of a sales impact.

GPU Market is Stabilizing

Nvidia stock struggled throughout the first half of 2019 due to a glut in the GPU space. This glut was partly the result of GPU makers anticipating high demand from cryptocurrency mining. But when crypto prices plummeted in 2018, demand fell as well, leaving Nvidia holding the bag of excess inventory.

In the past few months, the GPU market has stabilized. While it would seem that the rebound in Bitcoin/other cryptos would be the cause, Wedbush’s Bryson gives all the credit to the gaming space:

“While we aren’t forecasting a rebound…

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