$Meta Platforms (META.US)$ The high expenses resulted in a s...
$Meta Platforms (META.US)$ High expenses have led to a significant decline in net income, with Nvidia's net income in the third quarter only reaching 0.68 billion, a 72% drop compared to the previous year.
Based on Nvidia's net income over the past four quarters, investors calculate a dynamic pe ratio of 66 times and believe that there is a serious bubble.
This valuation method is completely wrong. For cyclical stocks, calculating the pe ratio during a downturn in the industry will appear unusually high, and this downturn is only a temporary phenomenon. Therefore, investors do not need to worry about Nvidia's declining net income.
Returning to the fourth quarter guidance, management expects revenue to be $6 billion, with a fluctuation range of 2%, and the median forecast is slightly lower than the market's expectation of $6.09 billion.
The good news is that the gross margin guidance for the fourth quarter is 63.2%, significantly higher than the past two quarters.
And at the earnings call, management believes that after the end of the fourth quarter, the channel inventory of gaming products is expected to return to normal levels and revenues are expected to increase month-on-month.
This confirms the analysts' speculation about the peak of inventory in the third quarter. Based on Nvidia's performance in the semiconductor downturn cycle in 2018, once inventory starts to decline, the stock price is expected to bottom out: considering the possibility of a global economic recession after the Fed's interest rate hike, the PC market in 2023 is currently forecasted to decline by 5%-10%, therefore, semiconductors may take time to recover and Nvidia may not perform well during this period.
Perhaps Berkshire Hathaway's large stake in Taiwan Semiconductor in the third quarter also indicates that the third quarter is the lowest point for semiconductors.
After passing through the darkest moment, Nvidia is starting to see the dawn! $NVIDIA (NVDA.US)$ $Microsoft (MSFT.US)$
Based on Nvidia's net income over the past four quarters, investors calculate a dynamic pe ratio of 66 times and believe that there is a serious bubble.
This valuation method is completely wrong. For cyclical stocks, calculating the pe ratio during a downturn in the industry will appear unusually high, and this downturn is only a temporary phenomenon. Therefore, investors do not need to worry about Nvidia's declining net income.
Returning to the fourth quarter guidance, management expects revenue to be $6 billion, with a fluctuation range of 2%, and the median forecast is slightly lower than the market's expectation of $6.09 billion.
The good news is that the gross margin guidance for the fourth quarter is 63.2%, significantly higher than the past two quarters.
And at the earnings call, management believes that after the end of the fourth quarter, the channel inventory of gaming products is expected to return to normal levels and revenues are expected to increase month-on-month.
This confirms the analysts' speculation about the peak of inventory in the third quarter. Based on Nvidia's performance in the semiconductor downturn cycle in 2018, once inventory starts to decline, the stock price is expected to bottom out: considering the possibility of a global economic recession after the Fed's interest rate hike, the PC market in 2023 is currently forecasted to decline by 5%-10%, therefore, semiconductors may take time to recover and Nvidia may not perform well during this period.
Perhaps Berkshire Hathaway's large stake in Taiwan Semiconductor in the third quarter also indicates that the third quarter is the lowest point for semiconductors.
After passing through the darkest moment, Nvidia is starting to see the dawn! $NVIDIA (NVDA.US)$ $Microsoft (MSFT.US)$
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