NVIDIA (NASDAQ:NVDA) Shares Gap Up After Strong Earnings

Key Points

• NVIDIA shares jumped 7.8% after the company reported fiscal second-quarter revenue of $96.22 billion and EPS of $2.22, exceeding analyst expectations. Revenue rose 105.9% year over year, driven by strong data-center demand.
• The company issued an optimistic outlook, forecasting about $108 billion in fiscal third-quarter revenue as AI infrastructure spending accelerates. However, gross margins are expected to ease to 74%, and risks remain from China restrictions, competition and supply constraints.
• Wall Street sentiment remains positive, with the stock carrying a “Moderate Buy” consensus rating and an average price target of $320.84. NVIDIA also authorized an $80 billion share-repurchase program, while insiders have sold significant amounts of stock recently.

Shares of NVIDIA Corporation (NASDAQ:NVDA - Get Free Report) gapped up before the market opened on Thursday after the company announced better than expected quarterly earnings. The stock had previously closed at $209.66, but opened at $222.86. NVIDIA shares last traded at $224.5450, with a volume of 68,698,740 shares.

The computer hardware maker reported $2.22 EPS for the quarter, topping analysts' consensus estimates of $2.09 by $0.13. The firm had revenue of $96.22 billion during the quarter, compared to analyst estimates of $92.27 billion. NVIDIA had a return on equity of 96.94% and a net margin of 62.97%.The company's revenue was up 105.9% on a year-over-year basis. During the same period last year, the company earned $1.05 earnings per share.

NVIDIA Announces Dividend

The firm also recently declared a quarterly dividend, which will be paid on Thursday, October 1st. Stockholders of record on Thursday, September 10th will be given a dividend of $0.25 per share. The ex-dividend date is Thursday, September 10th. This represents a $1.00 annualized dividend and a dividend yield of 0.4%. NVIDIA's payout ratio is currently 15.31%.

NVIDIA announced that its Board of Directors has approved a stock repurchase program on Wednesday, May 20th that allows the company to buyback $80.00 billion in shares. This buyback authorization allows the computer hardware maker to buy up to 1.5% of its stock through open market purchases. Stock buyback programs are generally an indication that the company's board of directors believes its shares are undervalued.

Key Stories Impacting NVIDIA

Here are the key news stories impacting NVIDIA this week:

• Positive Sentiment: Record results exceeded expectations: Fiscal Q2 revenue reached $96.2 billion, up 106% year over year, while non-GAAP EPS of $2.22 topped the $2.09 consensus estimate. Data Center revenue rose 117% to $89.0 billion, and GAAP gross margin was a robust 75%. NVIDIA fiscal second-quarter results
• Positive Sentiment: Strong forward outlook: NVIDIA forecast approximately $108 billion in fiscal Q3 revenue, above Wall Street expectations, and indicated roughly 70% fiscal 2028 revenue growth versus analyst expectations near 45%. CEO Jensen Huang said AI infrastructure demand is accelerating and the buildout is “at full steam.” NVIDIA signals longer AI spending runway
• Positive Sentiment: Customer demand remains substantial: Amazon Web Services and NVIDIA announced plans to deploy an additional two million GPUs, while the company highlighted production ramps for its Vera Rubin platform and continued hyperscaler adoption. AWS expands NVIDIA GPU order
• Positive Sentiment: Analyst support strengthened: Needham raised its price target to $300 and maintained a Buy rating; other firms also lifted targets following the results. Investors continue to view NVDA’s growth and valuation as attractive relative to its earnings trajectory. Needham raises NVIDIA price target
• Neutral Sentiment: Potential Hugging Face acquisition: Reports say NVIDIA may acquire open-source AI platform Hugging Face for approximately $12.9 billion to expand its software and developer ecosystem. However, the reports indicate discussions may not be finalized, and the price would represent a substantial premium to Hugging Face’s prior valuation. NVIDIA reportedly agrees to buy Hugging Face
• Negative Sentiment: Margins are expected to soften: NVIDIA guided fiscal Q3 gross margin to 74%, below the latest quarter’s 75%, as memory, advanced packaging and power constraints pressure costs. Investors are watching whether higher spending and supply investments could limit profitability.
• Negative Sentiment: Risks remain around China, competition and financing: The forecast assumes no Data Center compute revenue from China. Meanwhile, custom chips from OpenAI and Microsoft could gradually reduce hyperscaler reliance on NVIDIA, while the company’s investments and customer-financing initiatives have prompted concerns about circular financing and return on investment. Jensen Huang discusses NVIDIA AI investments

Wall Street Analyst Weigh In

A number of research firms have commented on NVDA. Deutsche Bank Aktiengesellschaft reaffirmed a "hold" rating and set a $255.00 target price (up from $220.00) on shares of NVIDIA in a report on Thursday, May 21st. Jefferies Financial Group reiterated a "buy" rating and issued a $300.00 price objective (up from $275.00) on shares of NVIDIA in a report on Thursday, May 21st. Evercore set a $465.00 target price on NVIDIA and gave the company an "outperform" rating in a research note on Thursday. China Renaissance assumed coverage on NVIDIA in a report on Friday, June 5th. They set a "buy" rating and a $319.00 target price on the stock. Finally, Citic Securities boosted their target price on NVIDIA from $242.00 to $315.00 and gave the stock a "buy" rating in a research report on Friday, May 22nd. One analyst has rated the stock with a Strong Buy rating, forty-nine have assigned a Buy rating and four have issued a Hold rating to the stock. According to MarketBeat, the stock has an average rating of "Moderate Buy" and an average price target of $320.84.

Insider Activity

In other news, Director Mark A. Stevens sold 885,000 shares of the firm's stock in a transaction dated Thursday, June 18th. The stock was sold at an average price of $210.17, for a total transaction of $186,000,450.00. Following the sale, the director owned 5,207,271 shares of the company's stock, valued at $1,094,412,146.07. This trade represents a 14.53% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. Also, Director Stephen C. Neal sold 15,500 shares of NVIDIA stock in a transaction dated Wednesday, June 3rd. The shares were sold at an average price of $215.73, for a total value of $3,343,815.00. Following the transaction, the director owned 116,135 shares in the company, valued at $25,053,803.55. This trade represents a 11.77% decrease in their position. The disclosure for this sale is available in the SEC filing. Over the last quarter, insiders have sold 1,900,500 shares of company stock worth $410,449,265. Corporate insiders own 3.94% of the company's stock.

Institutional Inflows and Outflows

A number of institutional investors have recently bought and sold shares of NVDA. HORAN Wealth LLC increased its position in shares of NVIDIA by 5.6% during the second quarter. HORAN Wealth LLC now owns 57,377 shares of the computer hardware maker's stock worth $11,480,000 after acquiring an additional 3,018 shares in the last quarter. Wellington Grp LLC boosted its stake in NVIDIA by 8.7% in the 2nd quarter. Wellington Grp LLC now owns 29,558 shares of the computer hardware maker's stock worth $5,914,000 after purchasing an additional 2,376 shares during the period. Brown Financial Advisors increased its holdings in NVIDIA by 21.3% during the 2nd quarter. Brown Financial Advisors now owns 42,229 shares of the computer hardware maker's stock worth $8,450,000 after purchasing an additional 7,404 shares in the last quarter. Kirkwood Financial Services bought a new position in NVIDIA during the 2nd quarter worth about $864,000. Finally, Tobias Financial Advisors Inc. raised its stake in shares of NVIDIA by 50.0% in the 2nd quarter. Tobias Financial Advisors Inc. now owns 29,786 shares of the computer hardware maker's stock valued at $5,960,000 after purchasing an additional 9,924 shares during the period. Institutional investors own 65.27% of the company's stock.

NVIDIA Trading Up 7.8%

The company has a market capitalization of $5.47 trillion, a P/E ratio of 34.57, a price-to-earnings-growth ratio of 0.42 and a beta of 2.23. The business has a fifty day moving average price of $207.61 and a 200 day moving average price of $200.35. The company has a quick ratio of 2.85, a current ratio of 3.44 and a debt-to-equity ratio of 0.04.

About NVIDIA

NVIDIA Corporation, founded in 1993 and headquartered in Santa Clara, California, is a global technology company that designs and develops graphics processing units (GPUs) and system-on-chip (SoC) technologies. Co-founded by Jensen Huang, who serves as president and chief executive officer, along with Chris Malachowsky and Curtis Priem, NVIDIA has grown from a graphics-focused chipmaker into a broad provider of accelerated computing hardware and software for multiple industries.

The company's product portfolio spans discrete GPUs for gaming and professional visualization (marketed under the GeForce and NVIDIA RTX lines), high-performance data center accelerators used for AI training and inference (including widely adopted platforms such as the A100 and H100 series), and Tegra SoCs for automotive and edge applications.

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