NVIDIA recently collaborated with Trend Micro, enhancing its security offerings through integration with NVIDIA's accelerated computing and AI Enterprise software. This partnership, alongside other enterprise initiatives, comes during a volatile period for tech stocks. While NVIDIA's share price increased by 15% over the past week, driven by positive market trends, it's notable that the broader market was similarly buoyant, gaining 7%. As markets face upcoming economic data releases and major earnings reports, NVIDIA's strategic moves, including its partnership with Trend Micro, provided additional resilience amid fluctuating tech sector performance.

We've spotted 2 possible red flags for NVIDIA you should be aware of, and 1 of them shouldn't be ignored.

Find companies with promising cash flow potential yet trading below their fair value.

NVIDIA's recent collaboration with Trend Micro aims to strengthen its security offerings by integrating with NVIDIA's accelerated computing and AI Enterprise software. This development could support NVIDIA's push into AI-driven markets, enhancing its appeal in data center and automotive sectors. Over the past five years, NVIDIA's total shareholder return, including share price appreciation and dividends, was very large at 1,430%. This performance underscores its growth trajectory compared to the broader semiconductor sector, which experienced more modest gains over the past year.

The tie-up with Trend Micro is likely to bolster NVIDIA’s revenue and earnings prospects by expanding its footprint in AI and computing services. Analysts anticipate revenue and earnings growth rates that reflect this potential, with forecasts indicating a continued upward trend. However, challenges like regulatory issues and component costs could impact margins. With the current share price at US$98.89, there is a substantial discount relative to the consensus analyst price target of US$164.74, illustrating a potential opportunity for investors if future growth estimates are met. Such a price movement suggests optimism regarding NVIDIA's strategic partnerships and product innovation.

Upon reviewing our latest valuation report, NVIDIA's share price might be too pessimistic.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NasdaqGS:NVDA.

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