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Time to Buy into Nvidia's (NVDA) Recent Rally as Earnings Approach?
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Nvidia (NVDA - Free Report) has led the recent rebound among chip stocks and is closing in on the $500 a share mark and near 52-week highs.
Further strengthening the chip leaders' recent momentum is today’s CPI data which came in much better than expected. The consumer price index was flat from a month ago and rose 3.2% year over year which was a decrease from September's 0.4% monthly spike and 3.7% annual increase.
Of course, easing inflation is always a plus for chipmakers as it bids well for consumer spending on non-essential items like electronics.
Recent Performance & Earnings Date
Nvidia’s stock was up roughly +2% today mirroring the rally among the broader indexes and has now popped +21% this month with the company set to report its third-quarter results next Tuesday, November 21.
Certainly, investors are wondering if Nvidia’s remarkable quarterly growth can continue and if it’s time to buy NVDA shares before they get even pricier. To that point, Nvidia’s stock has edged higher in 10 straight trading sessions marking its longest winning streak since 2016 and adding over $200 billion in market value on the way.
Image Source: Zacks Investment Research
Strengthening AI Capabilities
Demand for Nvidia’s graphics processors (GPUs) has been magnified by their ability to power artificial intelligence with its previous flagship AI chip being the DGX A100 which is geared for data centers.
In a bid to keep other AI chip competitors at bay such as AMD (AMD - Free Report) and Intel (INTC - Free Report) , Nvidia’s upgraded H100 GPU began shipping last fall. The H100 series has been able to accommodate new products and services from key partners such as Dell Technologies (DELL - Free Report) in addressing the growing demand for generative AI.
Even better, on Monday Nvidia stated its far superior H200 chip is scheduled to come out next year and is expected to further accelerate future AI models with faster response times including existing services like Generative Pre-Trained Transformers (ChatGPT). The H200 may also keep Nvidia ahead of AMD's MI300 series chips which will be available in December.
Q3 Preview
Nvidia is coming off of an unprecedented fiscal second quarter that saw year-over-year earnings growth of 429% with Q2 EPS at $2.70 per share which was also an 147% increase from the previous quarter as Q1 earnings came in at $1.09 a share in May.
Top-line growth has been off the shelf as well with Nvidia’s Q2 sales at $13.5 billion which doubled the $6.7 billion the company brought in during the prior year quarter and rose a remarkable 87% from Q1 sales of $7.19 billion.
Indicating that it may still be time to buy Nvidia’s stock is that Q3 earnings are expected to skyrocket 476% to $3.34 a share according to Zacks estimates compared to $0.58 per share a year ago. Plus, Q3 sales are projected to climb 172% to $16.12 billion versus $5.93 billion in the comparative quarter. Notably, Nvidia has surpassed earnings expectations in three of its last four quarterly reports posting an average earnings surprise of 9.79%
Image Source: Zacks Investment Research
The Trend of Positive Earnings Estimate Revisions
One of the most significant factors that indicates more near-term upside in a stock is positive earnings estimate revisions and this bodes well for Nvidia. It’s noteworthy that in the last seven days, annual earnings for Nvidia's current fiscal 2024 and FY25 are up roughly 1% and 2% respectively.
More compelling is that over the last three months, FY24 earnings estimates have now risen 38% with FY25 EPS estimates climbing 51%.
Image Source: Zacks Investment Research
Bottom Line
Correlated with the trend of positive earnings estimate revisions, Nvidia remains on the coveted Zacks Rank #1 (Strong Buy) list and has held a spot since May 31. During this time span, NVDA shares are up +31% and the stellar price performance could continue with another quarter of stellar growth expected during Q3 and a superior AI chip on the way.
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Time to Buy into Nvidia's (NVDA) Recent Rally as Earnings Approach?
Nvidia (NVDA - Free Report) has led the recent rebound among chip stocks and is closing in on the $500 a share mark and near 52-week highs.
Further strengthening the chip leaders' recent momentum is today’s CPI data which came in much better than expected. The consumer price index was flat from a month ago and rose 3.2% year over year which was a decrease from September's 0.4% monthly spike and 3.7% annual increase.
Of course, easing inflation is always a plus for chipmakers as it bids well for consumer spending on non-essential items like electronics.
Recent Performance & Earnings Date
Nvidia’s stock was up roughly +2% today mirroring the rally among the broader indexes and has now popped +21% this month with the company set to report its third-quarter results next Tuesday, November 21.
Certainly, investors are wondering if Nvidia’s remarkable quarterly growth can continue and if it’s time to buy NVDA shares before they get even pricier. To that point, Nvidia’s stock has edged higher in 10 straight trading sessions marking its longest winning streak since 2016 and adding over $200 billion in market value on the way.
Image Source: Zacks Investment Research
Strengthening AI Capabilities
Demand for Nvidia’s graphics processors (GPUs) has been magnified by their ability to power artificial intelligence with its previous flagship AI chip being the DGX A100 which is geared for data centers.
In a bid to keep other AI chip competitors at bay such as AMD (AMD - Free Report) and Intel (INTC - Free Report) , Nvidia’s upgraded H100 GPU began shipping last fall. The H100 series has been able to accommodate new products and services from key partners such as Dell Technologies (DELL - Free Report) in addressing the growing demand for generative AI.
Even better, on Monday Nvidia stated its far superior H200 chip is scheduled to come out next year and is expected to further accelerate future AI models with faster response times including existing services like Generative Pre-Trained Transformers (ChatGPT). The H200 may also keep Nvidia ahead of AMD's MI300 series chips which will be available in December.
Q3 Preview
Nvidia is coming off of an unprecedented fiscal second quarter that saw year-over-year earnings growth of 429% with Q2 EPS at $2.70 per share which was also an 147% increase from the previous quarter as Q1 earnings came in at $1.09 a share in May.
Top-line growth has been off the shelf as well with Nvidia’s Q2 sales at $13.5 billion which doubled the $6.7 billion the company brought in during the prior year quarter and rose a remarkable 87% from Q1 sales of $7.19 billion.
Indicating that it may still be time to buy Nvidia’s stock is that Q3 earnings are expected to skyrocket 476% to $3.34 a share according to Zacks estimates compared to $0.58 per share a year ago. Plus, Q3 sales are projected to climb 172% to $16.12 billion versus $5.93 billion in the comparative quarter. Notably, Nvidia has surpassed earnings expectations in three of its last four quarterly reports posting an average earnings surprise of 9.79%
Image Source: Zacks Investment Research
The Trend of Positive Earnings Estimate Revisions
One of the most significant factors that indicates more near-term upside in a stock is positive earnings estimate revisions and this bodes well for Nvidia. It’s noteworthy that in the last seven days, annual earnings for Nvidia's current fiscal 2024 and FY25 are up roughly 1% and 2% respectively.
More compelling is that over the last three months, FY24 earnings estimates have now risen 38% with FY25 EPS estimates climbing 51%.
Image Source: Zacks Investment Research
Bottom Line
Correlated with the trend of positive earnings estimate revisions, Nvidia remains on the coveted Zacks Rank #1 (Strong Buy) list and has held a spot since May 31. During this time span, NVDA shares are up +31% and the stellar price performance could continue with another quarter of stellar growth expected during Q3 and a superior AI chip on the way.