Nvdia (NVDA)
Quarterly Results : NVDA bears heightened expectations
We have not had a chance to write about Nvdia (NVDA) in detail. We did write a short note after the release of the last quarterly results. This can be seen here
One of the most remarkable things about the last set of results was the forecast for the current quarter. Nvidia then guided the Current quarter revenue to US$ 11bn compared with analysts’ expectations of about US$ 7.2bn, or 52% quarter-over-quarter growth.
The forecast was some 64% over the quarter ending June 2022 (see below). In addition, they guided to record (Non-GAAP) gross margins of 70% (which will be the highest ever) compared with expectations of 66.6%.
Source: Stratosphere.Io
This was mind blowing number and triggered a huge rally in AI stocks for a few weeks.
As a result of this advance , NVDA Valuations have become very high. As the charts below show, they are trading at a Price to sales Ratio of 45.4 times and Price to Earnings Ratio of 247.5 times. At this level, they are building in a lot of scope of disappointment.
Well three months have passed and today NVDA revealed how well they have done in the last three quarters. The guidance they gave was as follows:
Here’s what Wall Street were expecting of Nvidia in the quarter, before the numbers according to Bloomberg, versus how it performed in the same quarter last year.
Revenue: $11.04 billion expected versus $6.70 billion in Q2 last year.
Adjusted EPS: $2.07 expected versus $0.52 in Q2 last year.
Data center revenue: $7.98 billion expected versus $3.81 billion in Q2 last year.
Gaming revenue: $2.38 billion expected versus $2.04 billion in Q2 last year.
The actual numbers were as follows:
Earnings: $2.70 a share, adjusted, versus $2.09 per share expected by Refinitiv.
Revenue: $13.51 billion versus $11.22 billion expected by Refinitiv.
Nvidia said it expected third-quarter revenue of about $16 billion, higher than $12.61 billion forecast by Refinitiv. Nvidia’s guidance suggests that its sales will grow 170% on an annual basis in the current quarter.
The performance was driven by its data center business, which includes the A100 and H100 AI chips that are needed to build and run AI applications like ChatGPT. Nvidia reported $10.32 billion in data center revenue, which was up 171% on an annual basis.
Nvidia said its board of directors had authorized $25 billion in share buybacks.
The stock is trading up 8% after market hours as we await the earnings conference call.