The market's demand for "top students" NVIDIA is becoming increasingly high. On August 28th local time, Nvidia released its second quarter financial report as of July 28th of this year. In terms of performance, Nvidia has exceeded Wall Street's expectations across the board.
However, the explosive performance still did not meet investors' expectations. At the same time, Blackwell, known as the "strongest chip in history," delayed delivery, causing Nvidia's stock price to plummet in after hours trading after the financial report was released, resulting in a market value loss of nearly $200 billion. There are concerns about the existence of a foam in Nvidia's share price in the market.
The financial report and performance are impressive
Nvidia's second quarter revenue hit a new high, reaching $30 billion, a year-on-year increase of 122%, exceeding analysts' widely expected $28.7 billion; Net profit was 16.6 billion US dollars, a year-on-year increase of 168%; Diluted earnings per share were $0.67, an increase of 168% compared to $0.25 in the same period last year, exceeding analysts' expectations of $0.64.
Nvidia's most profitable product is the GPU (Graphics Processing Unit) used for processing AI computing. The data center business achieved a quarterly revenue of 26.3 billion US dollars, a year-on-year increase of 154%, accounting for 88% of the total sales.
At the same time as announcing its financial report, Nvidia announced that its board of directors has approved an additional $50 billion stock buyback plan and maintained a quarterly dividend of 1 cent per share, demonstrating the company's confidence in its financial condition and future development.
After the performance announcement, several investment banks raised their target price for NVIDIA, with an average target price of $143.44 given to NVIDIA by 61 analysts. JPMorgan Chase has raised its target price from $115 to $155; Bernstein raised its target price from $130 to $155; Ruijie Financial has also raised its target price for Nvidia from $120 to $140.
However, judging from the stock price performance, the market is not satisfied with Nvidia's performance. Due to the performance outlook for the third quarter, Nvidia has set itself a target of revenue of $32.5 billion, which is still significantly lower than the analyst's estimate of $37.9 billion.
Morgan Stanley stated that Nvidia achieved excellent results in the second quarter, but far from enough, and the market has very high expectations for this' top student '.
At the same time, the highly anticipated "strongest chip in history" Blackwell has been exposed to encounter difficulties in the production process and will be delayed in delivery.
At the performance meeting, Huang Renxun, founder and CEO of Nvidia, expressed full confidence in Blackwell and the company's future. He emphasized that Blackwell will lead the transformation of the entire industry. The demand for Blackwell from customers is' incredible ', and Blackwell's revenue is expected to reach billions of dollars in the fourth quarter.
What is the potential for further increase?
As the "popular Crispy fried chicken" in the US stock market and even in the global market, Nvidia's share price has risen nearly seven times since October 2022; The annual increase exceeded 150%, and the market value once exceeded 3 trillion US dollars.
The stock price fluctuations triggered by this financial report to some extent reflect that some investors have doubts about Nvidia's future growth potential.
Some institutions have proposed that a large part of NVIDIA's performance growth comes from a small number of customers, such as Google, Microsoft, Meta and other technology giants. The market is worried that the giant's "arms race" for AI has exceeded demand, and a foam is about to emerge.
On the other hand, Nvidia's competitors have also demonstrated strong capabilities.
In addition, Nvidia executives and directors, including Huang Renxun, have frequently sold company stocks for much larger amounts than before, sparking widespread speculation in the market.
According to data from the US Securities and Exchange Commission, from June 1st to August 8th, Huang Renxun reduced his holdings of 4.8 million shares of Nvidia stock, cashing out over $500 million. In the first half of 2024, Nvidia executives and directors sold over $700 million worth of company stock.
Citigroup stated that Nvidia's stock price may continue to fluctuate in the next two quarters before Blackwell drives sales growth and a turning point in gross profit margin.