Nvidia Q3 Massive Earnings Beat is Bullish

Nvidia earnings (NVDA) easily beat analysts targets, despite lofty expectations, thanks in part to an expansion in data-center demand, amidst the current AI craze. The semiconductor and data-center leader issued bullish guidance addition to a $25 billion (NVDA) stock buyback.

Summary

We are planning to take profits in the earnings play we talked about during the Wednesday “live broadcast” on (SMH) and wait for a dip for new trades.

Nvidia Bullish

Nvidia (NVDA) popped to a record high in after hours trading.
Super Micro (SMCI) surged 9.6%, after hours, regaining its 50d moving average.
Broadcom (AVGO) rose 3.13% and Marvell (MRVL) 4.6% in late trading
Snowflake (SNOW) also gained 4.04%.

Nvidia (NVDA) crushed the Street’s lofty expectations for Q2, in addition to guiding higher for the quarter. NVDA stock jumped in extended trading, closing off its highs at $502.15.

A key technical indicator to watch is the relative strength line. Currently, the RS line is at new highs (99), a sign of outperformance compared with the S&P 500. The RS line measures a stock’s price performance vs. the S&P 500 and is the blue line plotted on every IBD chart.

Earnings are expected to more than double (red box) in 2024.

The Accumulation/Distribution Rating for Nvidia is (B-). This proprietary rating measures daily price and volume changes in institutional ownership of a stock for the prior 13 weeks.

The company earned an $2.70 per share on sales of $13.51 billion in the quarter ended July 30. Analysts estimates for Nvidia averaged $2.08 per share on sales of $11.19 billion. Nvidia earnings eclipsed $16.0 billion, surging 429% while sales remained high at more than 101%.

Nvidia Superchips

Nvidia added a 101% y/y increase to fiscal second quarter revenues, beating its blockbuster guidance. The monstrous quarter was driven primarily by robust AI demand in data center and cloud sales on its latest GH200 superchip.

Deployment of “Nvidia H100 AI infrastructures” in the current quarter was managements primary focus. This segment of the business nearly tripled compared to the prior year.

Gaming and automotive segments also performed better than expected, despite a drop in consumer spending in the first half of 2023.

Nvidia infrastructures are the key to next-generation technologies, catapulting the company to the top of its competitors by supporting incremental AI opportunities based on capabilities of

Nvidia Data Center Outlook

Nvidia overdelivered on in the fiscal second quarter. Data center revenue was up 171% y/y to $10.3 billion. Optimism in data center sales through the second half of fiscal 2024 is reflected in analysts estimates for next year earnings.

This was the primary driver of its $13.5 billion in consolidated quarterly revenue, exceeding management’s previous guidance of data center sales to approximately $11 billion.

Management updated its guidance, while looking for another quarter of outstanding growth. Management expounded on its current quarter with $16 billion in revenue. Managment is lookig for an acceleration in data center sales going forward.

Join us today in the trading room for our LIVE broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.

Happy Trading,

Vinny