Investors eagerly awaited fiscal fourth-quarter earnings from Nvidia (NASDAQ: NVDA) yesterday. The artificial intelligence (AI) leader didn’t disappoint. Nvidia beat estimates and provided guidance well above most expectations.
Why, then, are shares lower by 4.4% as of 11:11 a.m. ET today? The answer is an interesting one and provides investors with a good reason to potentially take advantage of today’s dip.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Nvidia’s quarterly revenue reached a record $68.1 billion, marking a 20% increase from Q3 and a 73% rise compared to the same period last year. Even more promising was the company’s guidance for about $78 billion in revenue for the current quarter. That would represent another amazing quarter with 77% year-over-year revenue growth.
So it’s hard to explain why Nvidia shares are dropping after the update. That kind of growth is unheard of for a company this large. Nvidia’s market cap is over $4.5 trillion, after all. It remains highly profitable, with gross margins at about 75%. That might be what’s making investors sell, though.
Investors seem to think it’s all too good to be true. Those excellent margins effectively have nowhere to go but down. But that doesn’t have to be the case. The company is rolling out its next-generation Vera Rubin platform later this year, which will be much more energy efficient. Customers will likely continue to line up for its products.
With the stock now treading water this year, investors should take advantage of the dislocation between an incredible business with high margins and the stock price movement that doesn’t reflect that success.
Before you buy stock in Nvidia, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nvidia wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $445,995!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,198,823!*
Now, it’s worth noting Stock Advisor’s total average return is 927% — a market-crushing outperformance compared to 194% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
