Key Points
- According to a Citi analyst, Nvidia is expected to have 90% of the market share of the AI chip market.
- Nvidia’s data center segment saw a 171% YoY revenue spike to $10.32 billion in fiscal Q2 2024.
- NVDA shares are up 208% YTD, trading at 40X forward earnings and a $1.07 trillion market cap.
- 5 stocks we like better than NVIDIA
Nvidia Co. NASDAQ: NVDA is riding high as the king of the artificial intelligence (AI) mountain, posting hypergrowth top and bottom-line forecasts. It can largely be credited for lifting the technology sector higher and legitimizing the AI boom since its unexpected blowout in fiscal Q1 2024 earnings.
This is accompanied by the mouth-dropping 55% top-line guidance raise for Q2 2024. This opened the eyes of the world to the gargantuan opportunities that AI was creating across all industries, of which Nvidia was the key benefactor.
The viral adoption of Microsoft Co. NASDAQ: MSFT and Open. AI-owned ChatGPT has caused an eruption in AI demand across almost every industry. Nvidia produces the fastest and highest quality AI chipsets, which are on backorder due to unprecedented demand. It dominates AI in the data center segment with its GPU technologies. While macroeconomic conditions may be uncertain, it's not affecting the AI boom as spending continues to jump for AI-related products and services.
Blowout Again
On Aug. 23, 2023, NVIDIA released its fiscal second-quarter 2024 results for the quarter ending July 2023. The Company reported an earnings-per-share (EPS) profit of $2.70, excluding non-recurring items, versus consensus analyst estimates for a profit of $2.08, a 62-cent beat. Revenues surged 101.5% year-over-year (YoY) to $13.51 billion, crushing analyst estimates for $11.19 billion.
Revenues By Segment
Data center revenues were the superstar, growing 171% YoY to $10.32 billion, driven by cloud service providers and large consumer internet companies. Demand for the NVIDIA HGX platform was driven by the development of generative AI and large language models (LLMs). Gaming revenues rose 22% to $2.49 billion, driven by demand for GeForce RTX 40 Series GPUs.
Automotive sales rose 15% YoY to $253 million. Professional Visualization revenues fell 24% to $379 million due to the normalization of channel inventory levels. Professional Visualization products and services are used by engineering, design and entertainment professionals to create high-end visual content. Some of its products include the Quadro and RTX GPUs and the Omniverse software platform, which is used to create real-time 3D scenes.
Upside Guidance
NVIDIA raised its fiscal Q3 2024 revenue guidance from $15.68 to $16.32 billion, crushing $12.59 billion consensus analyst estimates. Non-GAAP gross margins are expected between 72% to 73%. Nvidia also raised its stock buyback program by an additional $25 billion without expiration in addition to the $3.95 billion remaining of the current buyback program.
Office Raid in France?
On Sept. 29, 2023, French antitrust regulator Autorite de la Concurrence raided the offices of a GPU maker widely believed to be Nvidia. The regulator didn't name Nvidia directly but had confirmed it conducted a dawn raid at the offices of a company suspected of anticompetitive practices in the graphics cards sector.
The regulator also stated that a dawn raid "does not presuppose a breach of the law," which only a full investigation would establish. Nvidia had no comment on the incident. Incidentally, a Citi analyst predicted that Nvidia could own more than a 90% market share in AI chips with each generation of upgrades. They also expect Advanced Micro Devices Inc. NYSE: AMD to have the second-largest market share.
Nvidia analyst ratings and price targets are at MarketBeat. Nvidia peers and competitor stocks can be found with the MarketBeat stock screener.
Daily Livermore Cylinder Pattern
The daily candlestick chart on NVDA presents a rare but powerful Livermore Cylinder pattern. This pattern is also described as a widening mouth and accumulation pattern. It comprises two non-parallel trendlines marking higher highs and higher lows with widening ranges until it explodes to the upside.
The channel began after the large gap up on its fiscal Q1 2024 earnings blowout in May 2023. Shares have been making higher highs, up to $502.62 in August 2023, since the $373.53 level in June 2023. The daily market structure low (MSL) trigger sits at $452.64. The daily relative strength (RSI) index is rising towards the 50-band. Pullback support levels are at $422.20, $411.77, $400.97 and $386.15.
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