Is NVIDIA Undervalued?

With shares of NVIDIA (NASDAQ:NVDA) trading around $13, is NVDA an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

NVIDIA is a visual computing company that develops graphics chips for use in personal computers, mobile devices, and supercomputers. The company operates through two segments: GPU and Tegra Processors. The GPU segment offers graphic processing unit processors for consumers desktop and notebook PCs, professional workstations, supercomputing servers and workstations, and industry-standard servers. The Tegra segment offers its processors to tablets, smartphones, and gaming devices. Personal computers, mobile devices, supercomputers, and servers are continuously being used and adopted at an increasing rate worldwide. NVIDIA provides essential components for technology products that affect most people’s home or work life so a company like NVIDIA is here to stay.

T = Technicals on the Stock Chart are Strong

NVIDIA stock has not seen too much positive movement in recent years. The stock seems to be struggling to find value as its price has chopped around over the last several years. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, NVIDIA is trading above its rising key averages which signal neutral to bullish price action in the near-term.


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(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of NVIDIA options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

NVIDIA Options




What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

May Options



June Options



As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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