NVIDIA Shares Face Pressure: Were Earnings Bad?

With Nvidia’s NVDA quarterly release now in the rearview, the 2024 Q4 reporting cycle for the broader Mag 7 group has officially ended. Most members in the elite club reported solid top and bottom line growth, though not all saw a favorable post-earnings reaction.The same can be said for Nvidia shares, which are facing a bit of pressure following the release of its results. Shares haven’t seen much positivity over the past three months overall, down roughly 2%.Image Source: Zacks Investment ResearchGiven the negative price action post-earnings, it raises a valid question – were the results bad? Let’s take a closer look.NVDA Results Reflect Healthy DemandConcerning headline figures in the print, quarterly sales of $39.3 billion shot 78% higher from the year-ago record, also reflecting a new quarterly record. Adjusted EPS of $0.89 reflected 71% growth YoY, also beating our consensus estimate by nearly 6%.The big growth on headline figures is undoubtedly reflective of a positive demand picture, a trend we’ve become very accustomed to over recent periods. Of course, Data Center results were the highlight of the print, which again were rock-solid.Data Center revenue totaled a record $35.6 billion, up more than 90% YoY and an impressive 16% sequentially. Notably, the reported figure beat out our consensus estimate by $2.0 billion, continuing its recent streak of outsized beats.Image Source: Zacks Investment ResearchMany were curious about Blackwell developments, which is the successor to Hopper. Concerning Blackwell, Jensen Huang, CEO, stated –“We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter. AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries.”Below is a chart illustrating Nvidia’s Data Center sales on a quarterly basis over the last seven periods.Image Source: Zacks Investment ResearchDemand for Blackwell remains rock-solid, a trend that’s expected to continue as companies keep wading into the AI space. Nonetheless, the rosy demand picture hasn’t been enough to perk shares up over the past three months, down 2% and modestly underperforming relative to the S&P 500.Shares aren’t expensive on a relative basis, with the current 30.6X forward 12-month earnings multiple nowhere near the five-year median and a fraction of five-year highs of 106.3X. Further, the PEG ratio works out to 1.5X, again well beneath historical values.Keep in mind that shares were considerably more expensive throughout 2020 and 2021, a time when the AI theme had yet to grip the market. Image Source: Zacks Investment ResearchNvidia expects $43.0 billion (plus or minus 2%) in sales for its next release, continuing its steep growth trajectory nicely.Putting Everything TogetherWhile the initial share reaction is negative, the results were overall solid, with NVIDIA NVDA continuing to be the AI favorite thanks to its consistently robust Data Center performance.Shares continue to reflect a prime selection for those looking to ride the AI wave, with the demand picture expected to remain bright, underpinned by positive commentary from CEO Jensen Huang regarding the Blackwell architecture and the growing demand for compute power overall.While the sideways action over recent months has undoubtedly frustrated some, the stock certainly needed a period to cool off after the massive multi-year run.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NVIDIA Corporation (NVDA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks