NVIDIA's stock is still down 44% for the year with Q3 earnings due tomorrow. The report could indicate the future of its stock. MACD and RSI are both positive.

Overview

NVIDIA Corporation, the inventor of the GPU (graphics processing unit), is an American multinational technology company which creates interactive graphics on laptops, workstations, mobile devices, notebooks, PCs and more.  The company’s head office is based in Santa Clara, California.  

Financials

The total revenue of the company for the financial year ending 31^st Jan. 2022 came in at $26.914bn versus $16,675bn in 2021. Gross profit rose by $7,079bn YoY with operating income finishing on $10,041bn against $4,532bn in 2021. EBITDA totalled $11,215bn for the year with earnings per share rising $2.12 from the previous year. Additionally, total liabilities rose by $5,677bn but total assets offset this increase as they rose by $15,396bn. NVIDIA also saw a big increase in cash on hand as the total amount jumped by almost $10bn. As a result of the above, shareholder equity came in at $26,612bn in January 2022 versus $16,893bn in January 2021.  

Technicals

From a technical perspective, NVIDIA’s shares are currently trading at $169.07 a share. The support looks established along the green trendline with minor support levels first in line at $159.25 then at $154.90. A break below these price levels could see the stock slide towards the major support at $135.07 (corresponding with the trendline). Towards the upside, resistance sits at $174.62 then a major resistance level at $180.45 (red oval). A break above the major resistance may see the stock begin to recover some of its losses which were acquired in the first half of the year. Although, this is more likely in the short/mid-term Looking at the indicators, MACD is currently positive and so is RSI as it reads 69. However, important to note that RSI is floating just below ‘overbought’ territory, if the stock becomes overbought, a short-term drip may occur.

Summary

Based on the financials of the company above, NVIDIA’s business is growing as revenue and gross profit jumped sufficiently year-on-year with operating income after expenses coming in at more than double. Earnings per share also rose more than double and the rise in total assets offsets the rise in total liabilities, highlighting that business operations are healthy. Furthermore, its cash on hand is growing strongly and shareholders' equity grew by 36% YoY. Overall, business operations and financials are healthy with established stability to continue to grow into the future. Based on the technicals, indicators are both positive suggesting more upside. However, important to note that NVIDIA is due to report quarterly earnings on the 16^th of November which may impact the direction of its stock, especially as RSI is also floating just below ‘overbought’ territory. A stronger-than-expected report could see the share price climb higher and vice versa.