According to Wells Fargo, Nvidia might see a boost next week, if past trends are anything to go by. The company is gearing up for its GPU Technology Conference (GTC) and historically, their shares have tended to outperform around this event. This is particularly noteworthy as Nvidia, often hailed as a leader in artificial intelligence and the bullish market scene, has seen its share prices slide 20% this year. This tumble comes after stellar performance with gains of over 238% in 2023 and 171% in 2024.
This dip has also seen Nvidia trailing behind the iShares Semiconductor ETF (SOXX), which is down 10% year-to-date. However, the upcoming conference could alter this scenario. Over the past five years, on average, Nvidia has managed to beat the SOXX by 6.5 percentage points during GTC week. Moreover, this outperformance often extends into the following two weeks, with Nvidia topping the ETF by an average of 3.8 percentage points.
In terms of returns, Nvidia typically enjoys an absolute average increase of 7% during the GTC week and 5.5% in the two weeks after. But these gains don’t always last long-term; a month after the conference, the average return drops to -1.6%, with Nvidia lagging the SOXX by nearly 3 percentage points.
Financial analyst Aaron Rakers notes that Nvidia enters this GTC week with its shares undervalued by roughly 35% when compared to its median forward price-to-earnings multiple over the past three years, as well as its enterprise value-to-EBIT ratio. He advises clients to consider purchasing Nvidia shares ahead of the GTC, citing confidence in the company’s expanding platform strategy.
