NVIDIA's Mind-Blowing Q1 Earnings: Surpasses Expectations and Skyrockets in After-Hours Trading!

The technology industry is currently going through a challenging period. The financial results of companies in this sector are noticeably worse than they were a year ago. However, NVIDIA seems to be relatively resilient to market turbulence. The company has released its financial results for the first quarter of fiscal year 2024.

 

Although the overall results are worse than they were 12 months ago, there is a visible quarterly growth. The question remains whether this trend will continue in the near future. The first quarter of fiscal year 2024 ended on April 30th.

 

According to the published data, NVIDIA recorded revenues of $7.19 billion during this period. This represents a 13% decrease compared to the same period last year and a 19% increase compared to the previous quarter. At the same time, the company achieved a GAAP net income of $2.04 billion. For the Non-GAAP comparison, it amounted to $2.71 billion.

 

These figures are interesting when compared to previous financial results. In the case of GAAP, there was a 26% increase in profit compared to the same period last year, while for Non-GAAP, it decreased by 21%. Both cases showed growth compared to the previous quarter, with increases of 44% and 25% respectively.

We would like to hear the commentary on this matter from HFM Market Analyst, Marco Turatti.

 

 

Could you please comment on Nvidia earnings after they're released?

Nvidia presented extraordinary results for Q1 2023, which far exceeded analysts' expectations on Wall Street, as well as a very strong outlook, and soared +25% in after-hours trading on the wings of its dominant position in GPU chips for AI. It added $220 billion in market cap in 1 hour, becoming the sixth largest company in the US500 and surpassing the value of all its US competitors combined (AMD, Intel, Micron).

 

Adjusted EPS was $1.09 versus 92 cents expected; Revenues was $7.19 billion, versus $6.52 billion expected. Sales of $11B exceeded the $7.5B forecast by 50%, with $4.28B coming from the Data Center business. Performance was driven by demand for its GPU chips from cloud vendors as well as from companies developing big LLM models like OpenAI (and many others).

 

Nvidia chief Jensen Huang said that the development of AI applications puts Nvidia in a prime position for a 10 year cycle at least. But he also warned of the risks of huge damage that could ensue from the US tensions with China, a market that ''cannot be replaced'' and will grow four times (up to 178 B Yuan) over the next four years, including for projects related to smart cities and edge computing.

 

One has to look between the lines to find some blemishes in the earnings reported: the gaming division reported a 38% drop in revenue while the automotive division grew 114% yoy but remains small at $300 million.

One of the ''biggest problems'' right now are the financial ratios: NVIDIA has a Price to Sales of 29.4x, the most expensive of any US stock in front of MSFT at 11.5x (US500 average is 2.4) and a Price to Earnings Ratios of 182, second only to AMZN and 10 times higher than the US500 average (24). With an expected opening on 26/05 at $380, NVDIA is at an all-time high and looks rather expensive despite its excellent prospects.

 

 

 

 

 

Marco Turatti – HFM Market Analyst 

After working for about 10 years in institutional trading rooms across Europe, Marco entered the FX sector as an analyst leveraging his knowledge of the financial markets. With a degree in Economics, from 2007 onwards he has constantly -and sometimes obsessively- studied and improved his trading and risk management techniques through active and direct investments. He is a firm believer in the need to know completely the securities one is dealing with, to always have a plan B ready, to build a macro view from which to derive the micro plan of action and -above all- to be strict with the rules one has set oneself, without taking anything personally.