Cathie Wood Just Bought Nvidia Stock, Is It Finally Time to Buy?
Nvidia stock has tumbled 17% since its mid-May all-time high, but the company's business didn't peak when its stock chart did. Revenue has accelerated for three consecutive reports, and even the starting line was impressive.
Intelligence analysis by Llama
Nvidia's revenue growth is its strongest move in a year and a half, with a 92% year-over-year revenue surge for its fiscal first quarter. The company's adjusted operating profit and earnings more than doubled for the quarter.
Imagine you have a super-powerful computer that can do lots of things really fast. That's what Nvidia's GPUs and AI accelerators do for data centers. They help them make AI solutions faster and better. Nvidia's business is doing really well, and its stock price has gone down a bit. This might be a good time to buy some Nvidia stock.
Analysis
A $60B Vote of Confidence
Nvidia's business didn't peak when its stock chart did. A week later, it reported an 85% year-over-year revenue surge for its fiscal first quarter that ended in late April. Revenue has accelerated for three consecutive reports, and even the starting line was impressive. Nvidia's quarterly top-line increases have been 55%, 63%, and 73% before late May's 85% pop.
Why Nvidia?
Nvidia makes the most popular high-performance GPUs and AI accelerators that data centers need for hyperscalers and other enterprise customers to crank out AI solutions. Nvidia's data center revenue rose 92% in its fiscal first quarter, accounting for 92% of the company's total revenue. And if you think Nvidia's top-line performance is great, you're going to love what's going on as that revenue works its way down the income statement. Its adjusted operating profit and earnings more than doubled for the quarter.
The Road Ahead
Nvidia didn't rattle investors by hosing down its guidance or becoming tighter with its money two months ago. Estimates have moved higher. Nvidia also announced a 25-fold increase to its dividend and authorized $80 billion in buybacks. Wood thinks Nvidia is a bargain here, and the company seems to agree. Valuation arguments are easier to make when a stock ticks lower as its fundamentals inch higher. And Nvidia fits that dream scenario.
Key points
- Nvidia's revenue growth is its strongest move in a year and a half.
- The company's adjusted operating profit and earnings more than doubled for the quarter.
- Nvidia's data center revenue rose 92% in its fiscal first quarter.
- The company announced a 25-fold increase to its dividend and authorized $80 billion in buybacks.
If Nvidia's revenue growth continues, the company's stock price could go up. The company's strong fundamentals and Wood's investment make it an attractive investment opportunity.
Nvidia is facing supply chain constraints and growing uneasiness about its circular financing deals. Chinese trade restrictions and tariff concerns also remain in place. These headwinds could impact the company's stock price.