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Nvidia (NVDA) a Must-Buy After AI-Fueled Blowout Earnings
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Nvidia Corporation (NVDA - Free Report) ignited a record-setting rally in the stock market on Feb 22 after the chipmaker posted blockbuster fiscal fourth-quarter earnings on the strength of a spending hysteria on artificial intelligence (AI).
Nvidia’s bumper profits and revenues helped the chipmaker register a record one-day gain in market capitalization for any company in the United States. Nvidia added $277 billion in market capitalization in the last trading session.
This California-based company’s one-day gain in stock market value easily surpassed the one-day gain of $204.5 billion by Meta Platforms, Inc. (META - Free Report) on Feb 2 after the social media giant reported robust quarterly results and declared its first dividend. In reality, Nvidia’s one-day gain eclipsed the entire value of the Coca-Cola Company (KO - Free Report) at $263.7 billion.
Nvidia has now regained its position as the third most valuable company in the U.S. stock market, lagging only behind Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) . Nvidia’s shares have now soared 59.5% so far this year, way more than the broader S&P 500’s rise of 4.3%.
Image Source: Zacks Investment Research
Nvidia registered the best one-day percentage gain of 16.4% yesterday since it rallied 24.4% on May 23, 2023. Nvidia’s stock has now touched an all-time high of $785.38. (read more: Nvidia Is Now 3rd Largest in Market Cap: More Upside Left?)
An upsurge in demand for Nvidia’s chips, primarily from companies looking to upgrade their AI offerings, helped the firm post revenues of $22.1 billion in the fiscal fourth quarter, up a whopping 265% from a year ago. Similarly, Nvidia’s earnings per share came in at $4.93 in the quarter ending on Jan 28, 2024, up a mind-boggling 765% from a year ago.
Nvidia’s chips are needed for AI models developed by companies such as Meta and Microsoft. In particular, Nvidia’s data center business, which is responsible for manufacturing the H100 graphics cards utilized for AI training, saw revenues jump $18.4 billion in the fiscal fourth quarter, up a solid 409% year over year. The data center business was able to shrug off the adverse effects of government curbs on exporting advanced AI semiconductors to China.
Let us not forget that the H100 graphic card has become a gold standard for AI developers for data crunching required in language models. The H100 chips are, at the moment, one of the most sought-after commodities in Silicon Valley after the rapid success of Open AI’s ChatGPT. Meanwhile, Meta is planning to increase its stock of H100 chips to 350,000 by the end of this year, as mentioned by chief executive Mark Zuckerberg.
Thus, Nvidia is optimistic about its future growth and expects revenues for the current quarter to come in at $24 billion, way ahead of estimates. Improvement in PC shipments in recent times as price pressure eases due to the Federal Reserve’s monetary tightening measures is also expected to benefit the chipmaker soon. Nvidia’s gaming business, too, made some advancements in the reported quarter and is expected to do well in the rest of the year.
Nvidia’s present valuation may look stretched compared to the S&P 500 but it isn’t as extreme as companies such as Cisco Systems during the dot-com bubble peak. On the contrary, thanks to the positives, Nvidia stock has more upside left, which certainly makes it a compelling buy for razor-sharp investors. Nvidia currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Nvidia’s expected earnings growth rate for the current and next year is 58.9% and 15.6%, respectively. Its estimated revenue growth rate for the current and next year is 52.5% and 15.5%, respectively. The Zacks Consensus Estimate for Nvidia’s current-year earnings has moved up 3.7% over the past 60 days.
Additionally, Nvidia has a high net profit margin since the company has been able to generate enough income from sales and has successfully kept operational costs under control. Nvidia’s net profit margin is a superb 48.9%, a tell-tale sign that its shares should move northward.
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Nvidia (NVDA) a Must-Buy After AI-Fueled Blowout Earnings
Nvidia Corporation (NVDA - Free Report) ignited a record-setting rally in the stock market on Feb 22 after the chipmaker posted blockbuster fiscal fourth-quarter earnings on the strength of a spending hysteria on artificial intelligence (AI).
Nvidia’s bumper profits and revenues helped the chipmaker register a record one-day gain in market capitalization for any company in the United States. Nvidia added $277 billion in market capitalization in the last trading session.
This California-based company’s one-day gain in stock market value easily surpassed the one-day gain of $204.5 billion by Meta Platforms, Inc. (META - Free Report) on Feb 2 after the social media giant reported robust quarterly results and declared its first dividend. In reality, Nvidia’s one-day gain eclipsed the entire value of the Coca-Cola Company (KO - Free Report) at $263.7 billion.
Nvidia has now regained its position as the third most valuable company in the U.S. stock market, lagging only behind Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) . Nvidia’s shares have now soared 59.5% so far this year, way more than the broader S&P 500’s rise of 4.3%.
Image Source: Zacks Investment Research
Nvidia registered the best one-day percentage gain of 16.4% yesterday since it rallied 24.4% on May 23, 2023. Nvidia’s stock has now touched an all-time high of $785.38. (read more: Nvidia Is Now 3rd Largest in Market Cap: More Upside Left?)
An upsurge in demand for Nvidia’s chips, primarily from companies looking to upgrade their AI offerings, helped the firm post revenues of $22.1 billion in the fiscal fourth quarter, up a whopping 265% from a year ago. Similarly, Nvidia’s earnings per share came in at $4.93 in the quarter ending on Jan 28, 2024, up a mind-boggling 765% from a year ago.
Nvidia’s chips are needed for AI models developed by companies such as Meta and Microsoft. In particular, Nvidia’s data center business, which is responsible for manufacturing the H100 graphics cards utilized for AI training, saw revenues jump $18.4 billion in the fiscal fourth quarter, up a solid 409% year over year. The data center business was able to shrug off the adverse effects of government curbs on exporting advanced AI semiconductors to China.
Let us not forget that the H100 graphic card has become a gold standard for AI developers for data crunching required in language models. The H100 chips are, at the moment, one of the most sought-after commodities in Silicon Valley after the rapid success of Open AI’s ChatGPT. Meanwhile, Meta is planning to increase its stock of H100 chips to 350,000 by the end of this year, as mentioned by chief executive Mark Zuckerberg.
Thus, Nvidia is optimistic about its future growth and expects revenues for the current quarter to come in at $24 billion, way ahead of estimates. Improvement in PC shipments in recent times as price pressure eases due to the Federal Reserve’s monetary tightening measures is also expected to benefit the chipmaker soon. Nvidia’s gaming business, too, made some advancements in the reported quarter and is expected to do well in the rest of the year.
Nvidia’s present valuation may look stretched compared to the S&P 500 but it isn’t as extreme as companies such as Cisco Systems during the dot-com bubble peak. On the contrary, thanks to the positives, Nvidia stock has more upside left, which certainly makes it a compelling buy for razor-sharp investors. Nvidia currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Nvidia’s expected earnings growth rate for the current and next year is 58.9% and 15.6%, respectively. Its estimated revenue growth rate for the current and next year is 52.5% and 15.5%, respectively. The Zacks Consensus Estimate for Nvidia’s current-year earnings has moved up 3.7% over the past 60 days.
Additionally, Nvidia has a high net profit margin since the company has been able to generate enough income from sales and has successfully kept operational costs under control. Nvidia’s net profit margin is a superb 48.9%, a tell-tale sign that its shares should move northward.