It is easier to understand why NVIDIA Corporation's sell-side consensus target price doesn't imply substantial upside, when one evaluates the stock's valuations against its peers and its own trading history. Typically, most investors, including myself, will require an annual investment return in the low-to-mid teens percentage range, so the +9% capital appreciation potential for NVDA doesn't seem sufficiently attractive to justify a Buy rating. This is based on a comparison of Wall Street analysts' average price target (usually for a one-year time frame or shorter) of $332.53 for NVIDIA Corporation with the company's last traded share price of $304.59 as of December 15, 2021. Market consensus suggests that NVDA's shares have a potential upside of only approximately +9%. NVDA's Historical Share Price Chart For 2021 As such, it is worth spending time to review the current market expectations for the stock with respect to its capital appreciation potential. NVIDIA Corporation has had an amazing share price run this year, with its stock price up +117% year-to-date in 2021 as per the chart below. In consideration of these different factors, I view NVIDIA Corporation's shares as a Hold. Nevertheless, NVDA is still expected to achieve a high-teens bottom line growth on an annual basis in the subsequent two years despite a high base in the current fiscal year. NVIDIA Corporation's valuations are demanding, and the gaming business segment's growth prospects are not likely to be as good as that of its data center business segment.
In this article, I note that investors should consider the company's future business outlook and valuations, as we enter into 2022. I touched on NVDA's Q2 FY 2022 (YE January 31) earnings in my prior update published on August 31, 2021.
I still have a Hold investment rating for NVIDIA Corporation ( NASDAQ: NVDA). Justin Sullivan/Getty Images News Elevator Pitch
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