Why NVIDIA Stock Is Up By 10% Today
NVIDIA Shares Move To New Highs After Strong Quarterly Report
Shares of NVIDIA opened with a gap up today and are moving higher as traders react to a strong quarterly report.
NVIDIA reported revenue of $7.1 billion and adjusted earnings of $1.17 per share, easily beating analyst estimates on both earnings and revenue. Data Center revenue totaled $2.94 billion, while Gaming revenue grew to $3.22 billion. On a year-over-year basis, NVIDIA’s revenue grew by 50%, which is an almost unbelievable performance for a company of this size.
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In the next quarter, NVIDIA expects to report revenue of $7.42 billion, so it expects to record revenue growth of 4.5% on a quarter-over-quarter basis.
The company stated that it remained committed to the acquisition of Arm, but it remains to be seen whether the deal will be approved by regulators.
What’s Next For NVIDIA Stock?
NVIDIA stock was one of the main beneficiaries of recent talks about “Metaverse” from Meta Platforms (former Facebook) and Microsoft.
Not surprisingly, analyst estimates for NVIDIA were moving higher in recent months. Analysts expect that the company will report earnings of $4.14 per share in the current year and $4.72 per share in the next year, so the stock is trading at roughly 68 forward P/E.
That’s expensive, but traders bet that the company will continue to grow at a very fast pace, and analyst estimates will move even higher.
S&P 500 is trading near all-time high levels so traders’ risk appetite remains strong. The market has shown its ability to tolerate rich valuations in case companies grow fast.
However, some traders may prefer to take some profits off the table after the major rally. RSI for NVIDIA stock is in the overbought territory so there is a material risk of a pullback, although RSI has recently moved away from yearly highs.
It should be noted that strong demand for growth stories may prevent this potential pullback. The fundamental story remains strong, and NVIDIA shares have a good chance to finish this year at all-time high levels.
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