In an electrifying after-hours revelation on Wednesday, 23 August, NVIDIA Corporation (NASDAQ: NVDA) sent shockwaves through the market by defying expectations and propelling its shares up a staggering 6% in post-trading, with the rally continuing into Thursday’s pre-market as positive sentiment paves the way forward. The tech juggernaut has demonstrated its prowess again, outshining estimates for its fiscal second quarter and unveiling an exhilarating outlook for the current period.
Delving into the extraordinary quarterly results for Nvidia, the giant chipmaker smashed expectations, with adjusted earnings surging to an impressive $2.70 per share, an impressive feat that far outshone the $2.09 per share figure projected by Refinitiv. The revenue front was equally spellbinding, with the company reporting a remarkable $13.51 billion, defying all expectations at $11.22 billion, according to Refinitiv. Second-quarter revenue doubled from the preceding year, catapulting from $6.7 billion to unparalleled heights. An astounding 88% escalation from the prior quarter further amplifies the company’s ascendancy. Moreover, net income experienced a meteoric rise, surging to a staggering $6.19 billion, translating to $2.48 per share, a genuinely astronomical leap from the $656 million, or 26 cents per share, recorded just a year prior.
Looking ahead with boundless optimism, Nvidia has unveiled projections that elevate its position as a guiding star in the tech galaxy. Amidst shining third-quarter anticipation, Nvidia forecasts fiscal third-quarter revenue to blaze past the $16 billion mark, leaving the Refinitiv forecast of $12.61 billion trailing in its wake.
Nvidia’s remarkable triumph and its sanguine forecast stand as a testament to the pivotal role of its graphics processing units (GPUs) amidst the monumental rise of generative artificial intelligence (AI). The company’s A100 and H100 AI chips have become the cornerstone for constructing and operating AI applications and large language models, illuminating breakthroughs like OpenAI’s ChatGPT.
A symphony of triumph resonates from Nvidia’s recent performance, orchestrated by its data centre division, reigning supreme with its AI chips. The luminaries of cloud service – Alphabet, Amazon, and Meta – have eagerly embraced the next-gen processors, fueling Nvidia’s growth prospects. Indeed, Nvidia’s GPUs, unrivalled dominators of the AI model training arena, have become the unequivocal victors of this year’s industry surge.
Analysing the daily price chart of Nvidia, it is evident that the chipmaker’s share price has experienced a phenomenal surge, more than tripling year-to-date.
If bullish sentiment persists, the potential exists for Nvidia’s share price to continue its impressive rally and reach unprecedented heights. For the bear case, the possibility exists for a price retraction toward lower levels, with the $482 level (horizontal black dotted line) of potential interest.
If the support level at $482 fails to hold, then we could possibly see further downside towards the next primary support level at $440 (horizontal black dotted line) or $405 (horizontal red line).
Nvidia’s relentless pursuit of innovation and remarkable second-quarter performance is a testament to the company’s indomitable spirit and visionary leadership. The company’s second-quarter earnings call has showcased its ability to exceed expectations, having outshined estimates in both earnings and revenue. As the generative AI revolution gains momentum, Nvidia’s role as a driving force becomes undeniable, with its A100 and H100 AI chips illuminating the path to groundbreaking applications. With a stellar third-quarter revenue projection and unwavering ambition, the potential exists for Nvidia’s share price to continue reaching unprecedented heights. However, macroeconomic risks exist, specifically concerning proposed chip export restrictions, which could potentially dampen positive sentiment in the future.
Market Analyst: Alexander Weiss
Sources: Bloomberg, CNBC, Financial Times, Nvidia, Trading View
Disclaimer: Trive South Africa (Pty) Ltd, Registration number 2005/011130/07, and an Authorised Financial Services Provider in terms of the Financial Advisory and Intermediary Services Act 2002 (FSP No. 27231). Any analysis/data/opinion contained herein are for informational purposes only and should not be considered advice or a recommendation to invest in any security. The content herein was created using proprietary strategies based on parameters that may include price, time, economic events, liquidity, risk, and macro and cyclical analysis. Securities involve a degree of risk and are volatile instruments. Market and economic conditions are subject to sudden change, which may have a material impact on the outcome of financial instruments and may not be suitable for all investors. When trading or investing in securities or alternative products, the value of the product can increase or decrease meaning your investment can increase or decrease in value. Past performance is not an indication of future performance. Trive South Africa (Pty) Ltd, and its employees assume no liability for any loss or damage (direct, indirect, consequential, or inconsequential) that may be suffered from using or relying on the information contained herein. Please consider the risks involved before you trade or invest.