Nvidia after Q4 Earnings Report
$NVIDIA (NVDA.US)$ recently reported its third-quarter earnings, and technical analysis shows mixed but generally bullish signals, driven by strong revenue growth and robust demand for its AI-focused GPUs. Key highlights from the analysis include:
Earnings Momentum: NVIDIA reported record revenue of $32.5 billion for Q3, reflecting an 82% year-over-year growth. The surge was fueled by strong demand for its Hopper and Blackwell GPUs, which are critical for AI and data center applications.
Stock Performance: Post-earnings, NVIDIA’s stock has shown signs of consolidation near its recent highs, with analysts projecting further gains. Technical indicators suggest a bullish trend, with potential upside driven by its dominant position in AI hardware and high operating margins of 68% in its data center segment.
Price Targets and Predictions: Analysts have raised price targets, with projections ranging from $165 to $204 in the short term. The company’s ability to meet or exceed expectations hinges on sustained demand and the successful rollout of its next-gen Blackwell GPUs.
Risks: Potential challenges include supply chain dependencies and economic headwinds. However, NVIDIA's dominant market share (estimated at 95% in AI training chips) offers resilience against these risks.
Focus shifts to Blackwell
Blackwell chips offer reduced energy consumption and operating expenses of up to twenty-five times compared to chips previously offered by the company. CEO Jensen Huang has described the demand for Blackwell as “insane.” Moregan Stanley analyst expect for these chips to be between $5-$6 billion for Q4, while Ivana Delevska of Spear Invest said she expects Blackwell revenue to bring in a staggering $12-$13 billion in revenue for the fourth quarter. However, reports of delivery constraints and overheating issues on customer servers may play a pivotal role in what the actual numbers are tomorrow.
Delays have been reported that the initial production of September had been delayed to December.
Earnings
A total EPS surprise to the upside of 25% has been welcomed by investors this year, with just under 20% upside in revenue. Q3 saw a slowing in EPS release to just of 5% against just touching double digits for the previous two quarters in 2024. However, the company has maintained its growth trajectory each quarter. With expectations of revenue jumping from $28-$33 billion between Q3 and Q4, an incredible 84% increase from the same period last year, it is hardly a sign of a slowing company should these numbers materialize.
The company saw a 3% decline in gross margin from Q1 to Q2 from 78%-75% with analysts expecting a similar gross margin of 74.4% this time round as operating expenses continue to rise.
The intrinsic value of NVIDIA Corporation (NVDA) has been analyzed using several valuation models, with varying outcomes depending on the assumptions and growth rates applied.
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