When Nvidia Corporation (NASDAQ:NVDA) reported its third-quarter (Q3) earnings last week, the market reaction was immediate. With the company smashing analyst expectations for both revenue and earnings, NVDA stock popped. On Friday, Nov. 19, it closed at $329.85, a new all-time closing high.

The thing is, NVDA stock has been setting new all-time high close marks all year. So the post-Q3 spike was essentially business as usual. Shares are up 144% so far in 2021, and that performance would have been even higher except the stock experienced a rare pullback on Monday, closing down 3%.

Given the the momentum that Nvidia has and the trajectory that has put NVDA stock on, investors who had been considering adding some shares to their portfolio now have a window of opportunity to do so before the rally continues.  

Holiday Sales to Look Forward to

On Nov. 17, Nvidia delivered its Q3 earnings and it was a blockbuster announcement. 

The company reported record revenue of $7.1 billion, up 50% year-over-year (YoY). Data Center revenue was also a record, up 55% YoY. Gaming revenue was another record-breaker, up 42% YoY. Those numbers demolished analyst expectations, as did earnings. Nvidia delivered earnings per share of $1.17 compared to the $1.11 that had been projected. The company also announced a quarterly cash dividend of 4 cents per share.

Given the spectacular Q3 performance, it’s no wonder that NVDA shares popped in the aftermath. And investors still have Q4 to look forward to, with its inevitable holiday shopping boost.

Is There Any Potential Downside for NVDA Stock?

While NVDA stock has proven to be an absolute powerhouse, the events of 2018 proved that it is not invulnerable. I previously wrote about why 2021 is not going to be a repeat of 2018 for this company — despite the volatility of crypto currencies at this time — but the company does face other challenges. 

Nvidia’s blockbuster $40 billion acquisition of custom chip designer Arm continues to be in doubt. Regulators could derail the deal over competition and security concerns. While a negative outcome would hardly affect Nvidia’s current business, it would put a crimp on some of the company’s future plans. A defeat would undoubtedly also have at least a temporary cooling effect on NVDA shares.

However, the biggest argument against NVDA stock may be that its spectacular growth rate has resulted in such a high valuation that it will run out of steam. That sentiment was expressed by Wedbush analyst Matt Bryson, who downgraded NVDA from “outperform” to “neutral” on Friday. In explaining the move, Bryson said:

“We just can’t find a means of justifying a higher target price for Nvidia beyond the levels that it currently trades.”

Bottom Line on NVDA Stock

High-flying NVDA stock currently earns an “A” rating in Portfolio Grader. There are risks to take into consideration, including a valuation that is pushing the comfort level of at least some analysts.

However, most are still fully onboard with this company. The Wall Street Journal’s poll of 44 investment analysts shows a consensus overweight rating for NVDA with an average $332.38 price target. That price target suggests a feeling that growth will be more modest over the next 12 months, but it still has upside.

Given the degree of optimism among the investment analyst community, any dip in NVDA stock can be seen as an opportunity. When I wrote about Nvidia as part of my feature on semiconductor stocks back in February, NVDA stock was trading at less than half of what a share is worth today. That kind of performance is hard to ignore, especially when it’s so consistent. It also means that anyone wanting to take advantage of Monday’s pullback would be well-advised to move quickly.

On the date of publication, Louis Navellier had a long position in NVDA. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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