NVIDIA Corporation (NVDA) has reported outstanding third-quarter earnings that surpassed market expectations. The company registered a remarkable revenue of $35 billion, reflecting a significant increase of 94% compared to the same period last year and a 17% rise from the previous quarter. This performance also led to adjusted earnings per share (EPS) of $0.81, which outpaced analysts’ projections of $33.2 billion in revenue and $0.74 EPS.
To understand the analysts’ misjudgment regarding NVDA, it helps to review the previous quarter’s earnings. Three months earlier, NVDA shares were valued at $125, and the company announced a revenue of $30 billion, marking a 122% increase year-over-year and a 15% uptick quarter-over-quarter. At that time, NVDA projected revenues of around $32.5 billion for the following quarter. Following the announcement, shares initially dipped to $101 but later rebounded to close above $145. Over the past three months, NVDA stock delivered a return of about 16%, mirroring its quarter-over-quarter revenue growth rate of 15%.
In its recent announcement, NVDA generated $35.1 billion in revenue—significantly higher than its previous guidance. The company’s quarterly revenue growth rate increased from 15% to 17%, and it has projected revenues of $37.5 billion for the current quarter, leading analysts to suggest the possibility of exceeding $40 billion in quarterly revenue soon. This trend suggests a sustained and potentially growing demand for NVDA’s chips.
As a co-founder and research director at Insider Monkey, I’ve been recommending a long position in NVDA since May 2023, which has yielded positive results for our subscribers. Personally, I hold a small position in NVDA and believe that the stock is poised to outperform the market in the coming months. However, it’s essential to consider that while NVDA is an exciting short-term investment, it may not be the best option for long-term hold. Currently, NVDA’s market capitalization is approaching $3.6 trillion, and if trends continue, it may exceed $4 trillion in three months. Investors appear to be expecting annual earnings of around $200 billion as the company matures, similar to Alphabet Inc (GOOGL), which trades at a forward price-to-earnings (P/E) multiple of 20. This leads to questions about whether NVDA can scale quarterly profits from $19.3 billion to $50 billion in the coming years.
While NVDA is a robust choice for short-term AI investments, I believe there are other AI stocks that could potentially offer higher long-term returns. For those in search of AI investment opportunities that are competitively priced, I recommend checking our report on an under-priced AI stock that trades at less than five times its earnings.
In summary, NVIDIA’s latest earnings report not only demonstrates its robust growth trajectory but also emphasizes the ongoing demand for its innovative technology. As the company continues to ascend, the potential for its stock to rise further remains strong. Investors might find that, alongside NVDA, there are other intriguing opportunities in the AI space that offer both value and growth potential.