Nvidia Corporation (NVDA) recently reported its second-quarter earnings, exceeding expectations with revenue of $30 billion, up 122% year-over-year. The strong performance translated to adjusted earnings per share of $0.68, surpassing analysts’ forecasts. Despite this, NVDA stock is down around 7% after hours due to the company’s outlook for the current quarter. NVDA expects revenue of $32.5 billion, with gross margins at 74.4% and 75.0% for GAAP and non-GAAP, respectively.
With a market cap of $3.1 trillion before the earnings report, investors are bullish on NVDA, expecting the company to earn around $140 billion per year. However, with quarterly revenue and profit at $30 billion and $16.6 billion, respectively, questions arise about the feasibility of NVDA reaching these figures. The company projected an 8% quarterly revenue growth rate for the next quarter, down from 15% in the previous quarter, raising concerns about its ability to achieve the expected profit levels.
Insider Monkey’s co-founder and research director has recommended a long position in NVDA since May of 2023, with positive performance for subscribers. However, he acknowledges that NVDA’s revenue projections have disappointed investors, leading to a sell-off of shares. The potential of NVDA in AI investments is recognized, but there are other AI stocks that may offer greater promise for higher returns within a shorter timeframe. Investors seeking promising AI stocks at a lower valuation may want to explore options beyond NVDA.
The decline in NVDA’s projected revenue growth rate has raised doubts about the company’s ability to reach the profitability levels expected by investors. As the market responds to the disappointing projections, NVDA shares may continue to decline. While the potential of NVDA as an AI investment remains strong, there are concerns about its ability to meet the high expectations set by its current stock price. Investors should consider exploring alternative AI stocks with promising outlooks and potentially lower valuations.
Despite the strong performance in revenue and earnings for the second quarter, NVDA’s stock price has seen a decline after hours, reflecting concerns about the company’s future growth prospects. As investors react to the disappointing revenue projections, NVDA may face further selling pressure in the coming days. The company’s ability to meet the high profitability expectations set by its current stock price will be closely watched, and investors may consider diversifying their AI investments to include other promising stocks with potentially more attractive valuations.
