What Happened:
Shares of leading designer of graphics chips Nvidia (NASDAQ:NVDA) jumped 23.7% in the pre-market session after the company delivered an exceptional quarter that topped analysts' estimates across key metrics. Revenue surpassed expectations by an impressive 10.3%, driven by strong data center revenue. Notably, the company improved profitability, with both gross margin and operating margin outperforming expectations. Earnings per share (EPS) beat by an impressive 18.8%. Inventory levels experienced a nice decrease during the quarter. In addition to the outstanding quarterly results, the revenue guidance for the next quarter surpassed expectations by over 50%. Yes, that's not a typo. Similarly, the operating profit guidance exceeded Consensus estimates meaningfully. Founder and CEO Jensen Huang emphasized the ongoing transformations in the computer industry, particularly the advancements in accelerated computing and generative AI. He highlighted Nvidia's readiness to seize the opportunities presented by the anticipated trillion-dollar shift in global data center infrastructure from general-purpose to accelerated computing, as firms implement generative AI into their business operations. Overall, the company's blowout quarter, with its impressive revenue growth, enhanced profitability, and positive guidance, underscored its strength in the market. Nothing in this world is perfect, but this was a near-perfect quarter.
What is the market telling us:
Nvidia's shares are very volatile and over the last year have had 37 moves greater than 5%. But moves this big are very rare even for Nvidia and that is indicating to us that this news had a significant impact on the market's perception of the business.
Nvidia is up 174% since the beginning of the year. Investors who bought $1,000 worth of Nvidia's shares 5 years ago would now be looking at an investment worth $6,290.
Is now the time to buy Nvidia? Access our full analysis of the earnings results here, it's free.