Analyst: NVIDIA Is Overvalued, But Don't Sell Ahead Of CES

After hitting a 52-week high of $119.93 Wednesday morning, shares of NVIDIA Corporation (NASDAQ: NVDA) were trading lower by more than 6 percent on the day.

Earning the title as technology's hottest stock in 2016 given its whopping 230 percent return, investors are rightfully questioning if now is the time to cash out.

Romit Shah, an analyst with Nomura Securities, was on CNBC Wednesday and offered his take on the stock.

Shah started off by stating that he upgraded NVIDIA to Buyin June when the stock was trading at around $40. Since then, all the momentum in the stock has been in one clear direction.

Shah continued that while NVIDIA 's stock appears to be overvalued as it's trading at nearly 40 times next years earnings. However, it wouldn't necessarily be wise to sell the stock as the company is likely to take center stage at the upcoming CES event, which has transformed itself to mostly an automotive show - an area where Nvidia is dominating in.

Shah also cautioned that NVIDIA is entering 2017 with some headline risk as it relates to U.S.-China relations. Specifically, China is the No. 1 buyer of PCs, smartphones and automotives - all of which account for a substantial portion of NVIDIA 's revenue.

Bottom line, Shah acknowledged that Nvidia's valuation is "astronomical relative to where its traded in the past." However, the analyst thinks CES and earnings season will prove to be positive catalysts for Nvidia so today is not the day to be a seller of the stock.