NVIDIA Corporation (NVDA) recently released its third-quarter earnings report, showcasing impressive financial performance that exceeded analysts’ expectations. The company’s revenue soared to $35 billion, marking an extraordinary increase of 94% year-over-year and 17% from the previous quarter. This impressive growth also translated into adjusted earnings per share (EPS) of $0.81, surpassing forecasts of $33.2 billion in revenue and $0.74 in EPS.
The discrepancy in analysts’ predictions can be traced back to the prior quarter when NVDA’s shares were valued at $125. The company had reported revenue of $30 billion, a staggering 122% increase year-over-year and a 15% increase quarter-over-quarter. Although NVDA projected a revenue for this current quarter of approximately $32.5 billion, the stock initially dipped to $101 but recovered significantly to close above $145. Over the last three months, NVDA’s stock returned about 16%, closely mirroring its revenue growth rate of 15%.
Today, NVDA disclosed revenue of $35.1 billion, exceeding its earlier guidance and accelerating its quarterly revenue growth from 15% to 17%. The company has already forecasted $37.5 billion in revenue for the upcoming quarter, suggesting potential earnings could exceed $40 billion. This positive trajectory indicates that demand for NVDA’s chips remains robust.
As a co-founder and research director at Insider Monkey, I have been recommending a long position in NVDA since May of 2023, and the investment has been rewarding for subscribers. Personally, I hold a modest position in NVDA shares, and I anticipate continued stock performance over the next few months. However, caution is necessary as the stock’s current market capitalization approximates $3.6 trillion, likely exceeding $4 trillion within three months. This market cap implies expectations for NVDA to generate annual earnings nearing $200 billion, akin to companies like Alphabet Inc. (GOOGL), which trades at a forward P/E ratio of 20.
The question remains whether it is feasible for NVDA’s quarterly profits, currently at $19.3 billion, to surge to $50 billion in a few years while maintaining growth akin to GOOGL’s. Although there are promising short-term gains associated with NVDA as an AI investment, I believe other AI stocks may present more favorable long-term prospects. For those interested in alternatives that are just as promising as NVDA but trade at less than five times their earnings, our report on the most affordable AI stock could provide valuable insights.
In summary, NVIDIA’s strong financial results and increased revenue projections highlight the company’s continued dominance in the AI chip market. While there may be fluctuations and uncertainties in the long term, the immediate outlook suggests promising growth and a robust demand for NVDA products, reflecting a resilient position in the tech landscape. Investors should remain optimistic about the opportunities within AI-related stocks, alongside NVDA, as the sector continues to evolve.