NVIDIA shares rebound on Tuesday, US chip supplier does not plan further acquisitions, CEO says

March 27, 2019 10:36 am

At the Calcalist business conference in Tel Aviv on Tuesday, Nvidia Corp’s Chief Executive Officer Jensen Huang said that the company did not plan to make more acquisitions for the present moment following the purchase of Israeli chip maker Mellanox Technologies.

NVIDIA shares closed higher for the fourth time in the past nine trading sessions on NASDAQ on Tuesday. The stock went up 1.78% ($3.09) to $176.87, after touching an intraday high at $181.69, or a price level not seen since March 22nd ($184.80).

Shares of NVIDIA Corporation have risen 32.49% so far in 2019 compared with a 12.43% gain for the benchmark index, S&P 500 (SPX).

In 2018, NVIDIA Corp’s stock retreated 31.01%, thus, it underperformed the S&P 500, which registered a 6.24% loss.

On March 11th Nvidia said it had agreed to pay as much as $6.8 billion for Mellanox Technologies, an acquisition that would aid Nvidia expand its data center and artificial intelligence business. The deal is to be finalized by the end of 2019.

Once recognized as a supplier of gaming chips, currently Nvidia also supplies chips designed to accelerate artificial intelligence tasks such as image recognition teaching to servers. At the same time, the chips, which Mellanox Technologies manufactures, connect servers together inside a data center.

About 25% of Nvidia’s revenue is generated by data centers. Sales from that segment surged 52% year-on-year to $2.9 billion in 2018.

Jensen Huang underscored that, after the deal with Mellanox was finalized, Nvidia would not cut costs and would maintain the Mellanox brand.

“We are going to keep every single product line. We are going to keep every single employee,” Nvidia’s CEO said at the Calcalist business conference, cited by Reuters. “There is no overlap whatsoever and there are no cost synergies.”

According to CNN Money, the 33 analysts, offering 12-month forecasts regarding NVIDIA Corporation’s stock price, have a median target of $185.00, with a high estimate of $225.00 and a low estimate of $120.00. The median estimate represents a 4.60% upside compared to the closing price of $176.87 on March 26th.

The same media also reported that 22 out of 38 surveyed investment analysts had rated NVIDIA Corporation’s stock as “Buy”, while 11 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for NVIDIA Corporation (NVDA) are presented as follows:

Central Pivot Point – $176.79
R1 – $185.71
R2 – $193.93
R3 – $202.85
R4 – $211.78

S1 – $168.57
S2 – $159.65
S3 – $151.43
S4 – $143.22

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