NVIDIA Corporation recently released its impressive third-quarter earnings, reporting revenue of $35.1 billion, marking a remarkable 94% increase year-over-year and a 17% rise from the previous quarter. The company also achieved adjusted earnings per share of $0.81, surpassing analysts’ expectations of $33.2 billion in revenue and earnings of $0.74 per share.
Interestingly, analysts had underpredicted NVIDIA’s performance prior to this report. Just three months ago, the company disclosed revenue of $30 billion, leading to a dip in stock price to $101, despite a strong year-over-year growth of 122%. Since then, the stock rebounded significantly, ultimately closing above $145. This comeback reflects a growth trajectory mirroring its quarter-over-quarter revenue increase.
NVIDIA’s recent earnings report showcases not only the company surpassing its own revenue projections but also a solid growth rate, even accelerating from 15% to 17%. With projections of $37.5 billion in revenue for the upcoming quarter, there is optimism that NVIDIA may exceed $40 billion in the near future, potentially driving their stock price further upward.
As the co-founder and research director of Insider Monkey, I have recommended a long position in NVIDIA since May 2023, a decision that has benefitted our subscribers. While I maintain a positive outlook over the next few months, with expectations that NVIDIA stock could surge to $170, I urge caution regarding long-term investments. The company’s current market capitalization of nearly $3.6 trillion raises questions about whether NVIDIA can maintain continuous growth at such a scale, comparable to established companies like Alphabet Inc.
In summary, NVIDIA represents a robust short-term investment, particularly in the AI sector, but I also believe that other AI stocks may offer even greater long-term potential. For investors looking for promising alternatives, there are options that are more affordable, trading at less than five times their earnings.
This highlights the ever-evolving landscape of AI investments, where both established and emerging companies present unique opportunities for growth. As we navigate this dynamic market, keeping an eye out for innovations and strategic investments could lead to significant long-term returns.