Explosive Growth: Nvidia (NVDA) Soars 26% on Impressive Earnings Report
Futures on major indices fell as Fitch placed the AAA rating of the United States on the negative watchlist. The 30-stock index dropped 255.59 points, or 0.77%. The S&P 500 ended the day with a decline of 0.73%, while the Nasdaq Composite fell by 0.61%.
Debt ceiling negotiations continued to exert pressure on the key benchmarks. Talks hit a roadblock earlier on Wednesday, but later House Speaker Kevin McCarthy reported that negotiations were progressing successfully. Our robots actively opened short positions yesterday, thereby safeguarding portfolios against potential downturns. In my opinion, the decision on the debt ceiling will continue to weigh on the markets.
In turn, Nvidia reported its first-quarter earnings for fiscal year 2024 on Wednesday, delivering a forecast that exceeded expectations and resulted in a 26% surge in share prices during after-hours trading. Our robots have been exiting positions ahead of the earnings report to mitigate risks, so this development did not have any impact on our profitability.
Earnings Results
For the quarter ending in April 2023, Nvidia (NVDA) reported revenue of $7.19 billion, which was 13.2% lower compared to the same period last year. Earnings per share (EPS) stood at $1.09, down from $1.36 in the previous year's quarter. The consensus estimate for revenue was $6.51 billion, resulting in a positive surprise of 10.50%. EPS exceeded the consensus estimate by 18.48% ($0.92 per share).
Breakdown by Segments:
- Gaming division revenue: $2.24 billion compared to the average estimate of $1.95 billion from seven analysts. Year-over-year revenue change for this segment was -38.1%.
- Professional Visualization revenue: $295 million, surpassing the average estimate of $239.93 million. This represents a year-over-year change of -52.6%.
- Automotive revenue: $296 million, slightly below the average estimate of $313.18 million. However, it reflects a significant year-over-year change of +114.5%.
- OEM and Other revenue: $77 million compared to the average estimate of $94.68 million. This represents a year-over-year change of -51.3%.
- Data Center revenue: $4.28 billion, surpassing the consensus estimate of $3.90 billion. This segment demonstrated a year-over-year change of +14.2%. Nvidia attributed this performance to the demand for its GPU chips from cloud service providers and major consumer internet companies using Nvidia chips for training and deploying generative AI applications such as OpenAI's ChatGPT. Nvidia's performance in the data center solutions segment highlights the increasing importance of AI chips for cloud providers and other companies managing a large number of servers.
MSFT x NVDA
From a product perspective, the most significant announcement for NVDA was the partnership with MSFT. The collaboration between Microsoft and Nvidia involves the integration of Nvidia AI Enterprise into Azure. This integration provides customers with a reliable corporate platform utilizing over 100 integrated tools from both companies. Additionally, users have access to Nvidia HPC resources for AI model utilization. Nvidia is also integrating its Omniverse Cloud into the Azure infrastructure (PAAS model). Omniverse Cloud offers enterprises a complete cloud environment for designing, developing, deploying, and managing industrial applications within the concept of the Metaverse. TAM (Total Addressable Market): The enterprise AI market was valued at $11 billion by the end of 2022 (1/10th of the overall AI market value) and is expected to demonstrate a CAGR of 32% over the next 10 years, reaching $155 billion by the end of 2030. However, this MSFT and NVDA initiative has the potential to significantly accelerate the projected growth rate. As a result, a larger number of suppliers will benefit from this move in the long term. Other AI initiatives: Yesterday, Nvidia also announced a partnership with DELL for the HELIX project, a groundbreaking product aimed at bringing generative AI capabilities to enterprises. The project aims to provide enterprises with a simple and efficient way to use generative AI, allowing them to create new models or customize existing ones using their own data.
NVDA in downward trend: price expected to drop as it breaks its higher Bollinger Band on August 21, 2023
NVDA broke above its upper Bollinger Band on August 21, 2023. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options. The A.I.dvisor looked at 55 similar instances where the stock broke above the upper band. In of the 55 cases the stock fell afterwards. This puts the odds of success at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on September 07, 2023. You may want to consider selling the stock, shorting the stock, or exploring put options on NVDA as a result. In of 77 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for NVDA turned negative on September 07, 2023. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .
NVDA moved below its 50-day moving average on September 15, 2023 date and that indicates a change from an upward trend to a downward trend.
The 10-day moving average for NVDA crossed bearishly below the 50-day moving average on September 19, 2023. This indicates that the trend has shifted lower and could be considered a sell signal. In of 14 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NVDA declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
The Aroon Indicator for NVDA entered a downward trend on September 26, 2023. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Bullish Trend Analysis
The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where NVDA's RSI Oscillator exited the oversold zone, of 21 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 12 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where NVDA advanced for three days, in of 347 cases, the price rose further within the following month. The odds of a continued upward trend are .
Fundamental Analysis (Ratings)
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to outstanding earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 63, placing this stock better than average.
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. NVDA’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: NVDA's P/B Ratio (37.879) is slightly higher than the industry average of (7.944). P/E Ratio (102.041) is within average values for comparable stocks, (53.779). Projected Growth (PEG Ratio) (1.337) is also within normal values, averaging (2.342). NVDA has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.022). P/S Ratio (32.154) is also within normal values, averaging (72.586).
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Industry description
Market Cap
High and low price notable news
Volume
Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
General Information
a manufacturer of computer graphics processors, chipsets, and related multimedia software
Industry Semiconductors
NVDA and
Correlation & Price change
A.I.dvisor indicates that over the last year, NVDA has been closely correlated with AMD. These tickers have moved in lockstep 82% of the time. This A.I.-generated data suggests there is a high statistical probability that if NVDA jumps, then AMD could also see price increases.
| Ticker / NAME | Correlation To NVDA | 1D Price Change % | ||
|---|---|---|---|---|
| NVDA | 100% | -0.74% | ||
| AMD - NVDA | 82% Closely correlated | -1.46% | ||
| AOSL - NVDA | 78% Closely correlated | -3.50% | ||
| ASML - NVDA | 77% Closely correlated | -2.29% | ||
| MPWR - NVDA | 75% Closely correlated | -1.90% | ||
| MRVL - NVDA | 73% Closely correlated | -1.75% | ||
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