Marie's opinion
8/28 was the most exciting financial day of the current fiscal year. I have both Nvidia (NVDA) and Crowdstrike (CRWD) shares. NVDA is once again dividing the country into Sekigahara. CRWD was the first settlement after a system failure. As a result, both stock prices fell after closing. why? is this for sale? buy it? Show off my dogma and prejudice. Let's go!
<What I think about NVDA's financial results >
・Guidance for next term
This is a summary of predictions made at my “Don't Lose Study Session,” which I posted in the post I posted the day before yesterday, plus today's results.
<What I think about NVDA's financial results >
・Guidance for next term
This is a summary of predictions made at my “Don't Lose Study Session,” which I posted in the post I posted the day before yesterday, plus today's results.
As you can see by looking at this, the actual results were higher than the consensus and my expectations. But stocks have declined. why?
In my post the day before yesterday I said:
In my post the day before yesterday I said:
I have a long history as an analyst, so I can see the NVDA CFO discussing guidance numbers with company executives until just before financial results.
When I decided on the guidance forecast at the study session on 8/18, the consensus was $31.4 billion. In that case, I think $32 billion would have been fine. So we also set our forecast to $32 billion.
But if the consensus is $31.7 billion, rounding it up becomes $32 billion. This is weak.
So, the day before yesterday, when I posted it, I said, “It's over consensus, so maybe they'll pay $32.5 or $33 billion.”
So when I actually opened the lid, the guidance for the next fiscal year was $32.5 billion.
This is such a delicate number. This is because guidance has always been in units of 1 billion ever since it surpassed $10 billion in the 23/4 fiscal year.
Guidance in 0.5 billion units came out at this point. Why $32.5 and not $33 billion? This is where I get caught.
Growth stocks like NVDA must go beyond guidance. It is necessary to come up with numbers that can be surpassed with a fairly safe margin.
Moreover, recently, consensus predictions have been revised upward as we get closer to financial results, so this is even more so.
When it comes to that, I'd like to set the guidance even slightly lower. $33 billion is a little tough. But $32 billion is probably too low. So I think it was $32.5 billion based on a painful judgment.
As I said in my post the other day, it has become difficult to compare the same period last year since the July fiscal year. The slowdown in the growth rate is clearly evident.
I feel that NVDA, which was lightly superior to that whether analysts raised the numbers, came here and became NVDA fearing an upward revision of the consensus.
I was able to sense that in the figure of $0.5. So, even though the guidance was much higher than expected, I think it was a reaction to “Scenario 2,” which I was referring to.
The financial results were good, but stocks are falling. This is exactly how shareholders have reacted to market prices that have been delayed.
Furthermore, there was another major problem with the current NVDA financial results.
- Margin revised downward
According to the guidance announced in the previous financial results, it was predicted that the gross margin (gross margin ratio) for the current fiscal year would drop.
Guidance for this term (fiscal year ending July) was 74.8%. And the result was 75.1%. Only 0.3% beats.
The Gross Margin for the April period was 78.4% and the guidance was 76.3%, so it was a beat of about 2%. In other words, the beat against this season's guidance was very weak.
My model was expecting 76%. That was probably the case with the analyst model.
And the guidance for the October term dropped further to 74.4%.
Demand far exceeded supply at NVDA, customers lined up to compete for products, and wasn't NVDA supposed to be able to sell chips at the promised price?
Why does gross margin drop in that state? something is wrong.
Furthermore, I'm not personally convinced by the reason for the margin decline mentioned in the conference call.
It seems that margins drop as Blackwell's sales increase, but why are the margins of the latest and most luxurious chips lower than those one model year ago?
Is it strange that chips are so expensive that they can't be sold unless the price is lowered? That's strange too.
Many institutional investors sell it temporarily when something doesn't make sense, and then investigate. If they are satisfied with the research results, they will buy it back even if the price is higher than when they sold it, without any problems.
This is because institutional investors fear bigger falls than they anticipate big rises. "Unknown" is the scariest thing. Institutional investors strive for "unbeatable investments."
Risk management is the most important factor for institutional investors. Therefore, there may have been investors who had doubts about the gross margin trend and sold after settling.
・There is no issue with Blackwell's delays
I believe Blackwell's much-discussed delivery delays have little to do with stock prices. A delay of 2 to 3 months in sales has no fundamental impact.
・What will happen to stocks tomorrow?
Stock movements after NVDA's financial results are driven by speculative investors rather than fundamental investors. They seek quick profits through ultra-short-term options and similar methods.
Speculators who entered the market betting on a long position with hopes of short-term gains have likely already sold or will sell tomorrow.
If a downward trend can be confirmed after the market opens, algorithmic trading following the trend is likely to trigger selling pressure. In that case, it wouldn't be surprising if it drops by double digits tomorrow. This is the scenario I foresaw the day before yesterday.
Given the positive financial results, there is a possibility of an upward turn tomorrow. However, without support from fundamental investors, the stock might not experience an increase.
I believe that fundamental investors might view the downward revision of gross margin, along with the incongruent bearish guidance of $0.5 for the upcoming fiscal year, as a limiting factor.
・What should I do?
I made stock purchases on 8/5 and cannot sell until 9/5 as per company regulations. However, I hold an excessive amount of NVDA shares, which have increased three to fourfold. Considering this, I am contemplating reducing the position by approximately half.
Stocks are expected to continue rising, and reaching $200 may be challenging in the long term. Therefore, I am not liquidating all my holdings but consider that the prime gains have been realized. Subsequently, it's akin to consuming fish while carefully removing bones. In essence, caution is advised.
When I decided on the guidance forecast at the study session on 8/18, the consensus was $31.4 billion. In that case, I think $32 billion would have been fine. So we also set our forecast to $32 billion.
But if the consensus is $31.7 billion, rounding it up becomes $32 billion. This is weak.
So, the day before yesterday, when I posted it, I said, “It's over consensus, so maybe they'll pay $32.5 or $33 billion.”
So when I actually opened the lid, the guidance for the next fiscal year was $32.5 billion.
This is such a delicate number. This is because guidance has always been in units of 1 billion ever since it surpassed $10 billion in the 23/4 fiscal year.
Guidance in 0.5 billion units came out at this point. Why $32.5 and not $33 billion? This is where I get caught.
Growth stocks like NVDA must go beyond guidance. It is necessary to come up with numbers that can be surpassed with a fairly safe margin.
Moreover, recently, consensus predictions have been revised upward as we get closer to financial results, so this is even more so.
When it comes to that, I'd like to set the guidance even slightly lower. $33 billion is a little tough. But $32 billion is probably too low. So I think it was $32.5 billion based on a painful judgment.
As I said in my post the other day, it has become difficult to compare the same period last year since the July fiscal year. The slowdown in the growth rate is clearly evident.
I feel that NVDA, which was lightly superior to that whether analysts raised the numbers, came here and became NVDA fearing an upward revision of the consensus.
I was able to sense that in the figure of $0.5. So, even though the guidance was much higher than expected, I think it was a reaction to “Scenario 2,” which I was referring to.
The financial results were good, but stocks are falling. This is exactly how shareholders have reacted to market prices that have been delayed.
Furthermore, there was another major problem with the current NVDA financial results.
- Margin revised downward
According to the guidance announced in the previous financial results, it was predicted that the gross margin (gross margin ratio) for the current fiscal year would drop.
Guidance for this term (fiscal year ending July) was 74.8%. And the result was 75.1%. Only 0.3% beats.
The Gross Margin for the April period was 78.4% and the guidance was 76.3%, so it was a beat of about 2%. In other words, the beat against this season's guidance was very weak.
My model was expecting 76%. That was probably the case with the analyst model.
And the guidance for the October term dropped further to 74.4%.
Demand far exceeded supply at NVDA, customers lined up to compete for products, and wasn't NVDA supposed to be able to sell chips at the promised price?
Why does gross margin drop in that state? something is wrong.
Furthermore, I'm not personally convinced by the reason for the margin decline mentioned in the conference call.
It seems that margins drop as Blackwell's sales increase, but why are the margins of the latest and most luxurious chips lower than those one model year ago?
Is it strange that chips are so expensive that they can't be sold unless the price is lowered? That's strange too.
Many institutional investors sell it temporarily when something doesn't make sense, and then investigate. If they are satisfied with the research results, they will buy it back even if the price is higher than when they sold it, without any problems.
This is because institutional investors fear bigger falls than they anticipate big rises. "Unknown" is the scariest thing. Institutional investors strive for "unbeatable investments."
Risk management is the most important factor for institutional investors. Therefore, there may have been investors who had doubts about the gross margin trend and sold after settling.
・There is no issue with Blackwell's delays
I believe Blackwell's much-discussed delivery delays have little to do with stock prices. A delay of 2 to 3 months in sales has no fundamental impact.
・What will happen to stocks tomorrow?
Stock movements after NVDA's financial results are driven by speculative investors rather than fundamental investors. They seek quick profits through ultra-short-term options and similar methods.
Speculators who entered the market betting on a long position with hopes of short-term gains have likely already sold or will sell tomorrow.
If a downward trend can be confirmed after the market opens, algorithmic trading following the trend is likely to trigger selling pressure. In that case, it wouldn't be surprising if it drops by double digits tomorrow. This is the scenario I foresaw the day before yesterday.
Given the positive financial results, there is a possibility of an upward turn tomorrow. However, without support from fundamental investors, the stock might not experience an increase.
I believe that fundamental investors might view the downward revision of gross margin, along with the incongruent bearish guidance of $0.5 for the upcoming fiscal year, as a limiting factor.
・What should I do?
I made stock purchases on 8/5 and cannot sell until 9/5 as per company regulations. However, I hold an excessive amount of NVDA shares, which have increased three to fourfold. Considering this, I am contemplating reducing the position by approximately half.
Stocks are expected to continue rising, and reaching $200 may be challenging in the long term. Therefore, I am not liquidating all my holdings but consider that the prime gains have been realized. Subsequently, it's akin to consuming fish while carefully removing bones. In essence, caution is advised.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Kimihiko OP : I think the reason for the deterioration in margin is the cost of Blackwell's renovation.
masa5858 : I heard that TSMC has been requested to raise prices. Well, that's understandable.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
大負けネコ : Nice to meet you. I am a small individual investor who assumes "long-term holding"? In fact, I am a beginner in US stocks who started buying US stocks at the end of last year. However, my investment experience began with "investment trusts" over 20 years ago, and I almost suffered a big loss from the immediate impact of the "Lehman Shock". I am not a "investment/financial professional", but in my work, I have experience with a personal business amount of 0.2 billion yen and budget management of about 12 billion yen as a budget management officer for the entire sales facilities. Due to my major in economics, I have been involved in accounting/finance for a long time, but I am also a handyman who can be assigned to events, foreign affairs, property management, and anything. I also have experience as a behind-the-scenes responsible person for international conferences. I started trading stocks around 10 years ago with a focus on "Japanese stock value investment", and I realized that despite not being good at math, I am good with numbers. Before I knew it, I became a "Nvidia minor shareholder" and now we are holding "earnings reports" again. However, I imagined that the main cause of the market being sold off in response to the Q2 earnings announcements of GAFAM was the "short-term speculative behavior prioritizing profit-taking by institutional investors" when it only fell below market expectations by just one indicator. After raising the hurdle of the preliminary estimate, they deliberately created an arbitrage and conducted a large-scale short sell to induce a decline in stock prices, and then bought back a large amount at the lower price. I haven't read the preliminary explanations from an analyst's perspective, but it was very helpful. Based on my own experience, at least for the next two years, "Nvidia is a buy" according to my buying criteria. On August 5th, on the "Black Monday of Reiwa," I recovered from a loss of about 3 million yen in Japanese stock assets to an increase of about 1 million yen over the past 24 days. US stocks are less than one-tenth of my equity assets and have been on the rise since the beginning. Although the investment fund is mainly invested in US stocks, it is enjoying a "bargain sale in Japan and the US" with asset losses reduced from about 2 million yen to about 10,000 yen through diversified investments in time, region, and products. Individual investors can aim to maximize profits with a long-term investment perspective against institutional investors who prioritize short-term performance. Now, should I use the "discounted accumulation dollar deposit utilizing the strong yen" to increase my holdings of US stock value stocks? Even as an amateur investor, I don't feel like losing. Because my portfolio is well-diversified. I apologize for the long text. And I am grateful for your contribution of knowledge.
HONDA N-ONE : Financial estimates and consensus still don't quite fit. In general, if the actual results do not meet the estimate, it is considered that the estimate was wrong. In the world of stocks, it is considered bad to have "missed estimates" with "unachieved results". It is the missed estimate that is bad, not the one who made the estimate. I don't understand. Wouldn't it be better if the results were better than the previous year or period? I don't understand.
もこgg : Considering the future growth prospects, the stock price would inevitably fall if it falls short of those predictions.
It's only a temporary downturn of the excess increase. In the long run, it will continue to rise.
182737223 : Leaving aside whether the analysis is correct, this is a person who writes self-righteous articles that have a strong sense of self-importance.