NVIDIA Corporation (NVDA) has reported its latest earnings results, showcasing a spectacular performance that exceeded market expectations. The company achieved a revenue of $35 billion for the third quarter, marking an impressive 94% increase compared to the same quarter last year, and growing 17% from the previous quarter. Adjusted earnings per share (EPS) stood at $0.81, outperforming analysts’ estimates of $33.2 billion in revenue and an EPS of $0.74.
So, why did analysts miss the mark on NVDA’s performance again? To understand this, we can look back at the previous quarter. Three months ago, NVDA shares were at $125, and the company released a revenue figure of $30 billion, up 122% year-over-year, while projecting $32.5 billion for the current quarter. Initially, the stock price dropped to $101 but later rebounded, closing above $145. Over the last three months, NVDA shares have returned approximately 16%, closely aligned with the revenue growth rate of 15% from the previous quarter.
Recently, NVDA announced a remarkable revenue of $35.1 billion, surpassing its guidance and reflecting a quarter-over-quarter growth acceleration from 15% to 17%. The company anticipates even higher revenue of $37.5 billion for the current quarter, which hints at the potential to exceed $40 billion. This continued strong demand for NVDA’s chips suggests a positive outlook for the company, with its stock price possibly increasing by another 16-17% over the next three months, targeting a price point of $170.
As the co-founder and research director of Insider Monkey, I have recommended a long position in NVDA since May 2023, and the stock has performed well for our subscribers. Personally, I hold a small position in NVDA shares, confident that it will outperform the market over the next quarter. However, it is important to note that while NVDA may shine in the short term, the long-term investment perspective is more nuanced. With a current market cap nearing $3.6 trillion, there are expectations for the stock to reach over $4 trillion in just a few months. This ambitious outlook implies that investors predict NVDA to achieve annual earnings of around $200 billion once it stabilizes as a mature company, akin to Alphabet Inc (GOOGL), which trades at a forward P/E ratio of 20.
While I recognize NVDA’s potential in the AI sector as a solid short-term investment, I also believe there are AI stocks with even greater long-term potential and higher return prospects. For those interested in exploring promising AI investments that trade under five times their earnings, I recommend checking our analysis on the most affordable AI stocks.
In essence, NVDA continues to thrive, reflecting resilience and growth in the tech market, specifically in AI sectors. For investors, this indicates promising opportunities, provided they are willing to remain vigilant about market valuations and long-term growth potential.