Nvidia Q2 - Beats Expectations

16-AUG-19

Hold on, we have one more earnings season update for you! Nvidia shares were up sharply last night after the company reported July-quarter earnings results that beat Wall Street estimates.

Nvidia designs and sells GeForce graphics processing units (GPUs) for the gaming and professional graphics markets, as well as Tegra system on a chip units (SoCs) for the mobile computing and automotive market.

Nvidia also makes specialised parallel-processing chips for high-performance computing applications. They sell these for use in data centres, autonomous cars, supercomputers, deep-learning platforms and artificial intelligence applications.

That all sounds great, but you might know that Nvidia has been our most unsuccessful stock over the past 12 months, declining by over 40%. What gives? Well, as previously mentioned by my colleagues and I in prior daily notes, the stock got a bit overheated in 2018 when the cryptocurrency craze resulted in a very high level of chip sales, that confused the revenue and profit outlook. The stock is up about 15% this year, but has been quite volatile in the last six months.

Anyway, the numbers. They reported adjusted earnings per share of $1.24 for the quarter versus the consensus of $1.15 cents. Revenue came in at $2.58 billion, down 17% year-over-year but better than the $2.55 billion average analyst estimate. The guidance was in line with prior forecasts.

Nvidia CEO Jensen Huang said in the company's news release that "Nvidia's accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots."

Nvidia shares were up 5.6% to around $157s in after-hours trading. I have previously gone on record as saying that this stock will be back at its all-time high of $293 in due course. So it still has a way to go. Buy some!