I can’t give you a definitive call on the top for this stock and this rally, but I cam sure of one thing, I don’t want to sell Nvidia before the company’s new Blackwell chip architecture has hit full launch speed in late 2024 and 2025. My read is that this is the “perfect” AI chip for this moment in the AI boom.
I think there are reasons to worry about Nvidia’s valuation and its ability to continue to generate revenue and earnings growth at a pace that would support a forward price to earnings ratio above 40, but I think those re worries for 2025. In 2024, I don’t see anything that disrupts the AI boom story. Over the next six months or so I’d like to be buyer, especially id I can get the shares on a temporary drop. So yesterday’s drop to $118 was a promising development. There was technical support at the 50-day moving average near $100 so there was a chance the stock would move lower. Today, Tuesday, June 25, though, shares of Nvidia rallied, closing ups 6.76% at $126.09. This doesn’t mean the drop is over or the opportunity is lost,
Yesterday, May 22, after the market close, Nvidia (NVDA) crushed Wall Street projections for revenue and earnings for the company’s fiscal first quarter of 2025. Nvidia reported that revenue soared 262% year-over-year to a record $26 billion, marking an 18% quarter-over-quarter increase. Adjusted earnings per share climbed 461% to $6.12. The Wall Street consensus had called for revenue of $24.65 billion and earnings per share of $5.59. And it even beat the Wall Street “whisper number,” which in a bullish momentum situation like this runs considerably above the official consensus. Data center revenue hit a record $22.6 billion, up 427% year over year. Data center revenue represents 87% of Nvidia’s total sales. For the current fiscal second quarter of 2025 Nvidia told investors to expect sales of $28 billion, up 107% year over year.
Today’s video is Go Away in May? Historically, the months between November and May were much more profitable than the months from May to November. The saying “Go away in May” came from that distribution of returns, suggesting investors should get out of the market during the less profitiable May to November period. This advice holds particularly true for tech stocks, which have very clear seasonal revenue patterns. For example, in March of 2023, Apple (AAPL) earned $1.52 per share, in June earnings per share went down to $1.26, in September they went back up to $1.46 and then the company blew it out in December to $2.18. While this isn’t indicative of the entire tech sector, it’s a good example of this seasonal pattern, especially for technology stocks with big consumer businesses. So what about this May? I’d say, you can probably “go away”–but maybe a little late than usual. NVIDIA’s (NVDA) earnings come out on the 22nd of May and will likely be giant. Current Wall Street estimates have earnngs per share at $5.14, up from $.88 a year ago. After that,the technology sector is relatively quiet. The next big tech event to look out for is Apple’s Worldwide Developers Conference in June, which could result in “buzzy” tech announcements about AI. After that, I don’t see a lot of reason to be overweight technology and I’ll look to take some profits. I think this amounts to a modest Go Away in May call.
Nvidia (NVDA) doesn’t report earnings until May 22. But the report is already shaping up as critical for the stock. Analysts see the company reporting earnings of $5.13 a share for the quarter, up from just 88 cents a share in the same quarter of 2023.
But the short-term earnings numbers aren’t what’s most importance right now. Nvidia has roughly 90% share in the market for AI-accelator chips. That’s put a big target on the company’s back. No one expects Nvidia is maintain that 90% share–which is okay since the market is growing so fast. Last month, analysts at Bank of America said the market could reach anywhere between $250 billion and $500 billion over the next three to five years. That was a big jump from their earlier estimate of less than $250 billion. The question is How fast all the efforts to compete with Nvidia will eat into that market share.
Today’s Hot Button Moves NOW video is AI Woodstock. Nvidia’s big AI update on March 18 has been dubbed “AI Woodstock” by Bank of America. Nvidia will update its pipeline and prospects for new projects and report on where it sees the AI market going. It will likely create volatility throughout the AI sector as investors try to get out ahead of the company’s projections. Tuesday, Bank of America raised its target price for Nvidia from $925 to $1100 and upped its estimate of the size of the AI accelerator market from under $250 billion to $250-500 billion in 3-5 years. This wide gap in both market size and time makes me a little nervous, but for now we can focus on the next few days. Nvidia will be discussing its new B1000 and N100 chips, ethernet switches, and AI at the Edge for PCs and smartphones. Keep an eye on stocks like Broadcom (AVGO), Qualcomm (QCOM) and Super Micro Computer (SMCI) for reaction to this news. The volatility in the reaction could open up a good place to get in on these AI stocks.
Yesterday, Thursday, February 22, Nvidia (NVDA) gained 16.40% at the close after beating Wall Street expectations on earnings and revenue after the market close on Wednesday. And then raising guidance for the rest of 2024. But what most interested me on Thursday were what tech stocks Nvidia carried higher with it–and which stocks it didn’t.
Well, optimistic analysts just weren’t optimistic enough about Nvidia’s (NVDA) fourth quarter 2023 earnings. The company reported adjusted earnings of $5.16 per share on revenue of $22.1 billion. Analysts were expecting earnings of $4.60 a share and revenue of $20.4 billion.
Can you hear the barkers yelling to the crowd? It’s Wall Street analysts rushing to raise their target prices for Nvidia (NVDA) ahead of next week’s quarterly earnings report. On February 21, after the close, Nvidia is expected to report earnings of $4.18 share, up from $0.65 a share in the quarter a year ago, on revenue of $20.5 billion. And even though the stock is up 47% for 2024 as of the February 15 close and up 219% for the last year, Wall Street analysts are rushing to increase their target price on the shares.
It’s important to remember exactly how young artificial intelligence is as a market product. I certainly don’t think it’s possible to project the long-term winners on either the software or hardware side. Remember the days when Apple (AAPL) thought it was worth buying a Super Bowl add to urge consumers to smash the IBM PC empire? But I do think the hardware road map is petty clear for the next two to three years. Which is why I’m adding shares of Advanced Micro Devices to my portfolios tomorrow.
Here are the first 8 picks for my GREATER Growth Stocks Special Report. More on the way.
