Nvidia: Buy Now?

Nvidia did really well in Q1 of fiscal 2024. Their guidance exceeded expectations and investors were thrilled. As a result, their shares went up by almost 25%.

Nvidia's stock went up by 166% this year. People are wondering if it's too late to buy it. Nvidia did well in its quarterly report. Let's find out why.

Nvidia Ready To Accelerate

Nvidia had $7.2 billion in revenue in Q1 2024. This was 13% less than the same time last year. But it was still more than the $6.5 billion they expected. Their adjusted earnings went up by 28% to $0.82 per share.

Nvidia's profits went up because they have great pricing power in the data center GPU market. They sell GPUs for thousands of dollars. Businesses want to use AI, so they need these GPUs for training and inferencing.

Nvidia CFO Colette Kress spoke on the earnings conference call. She said the company had good results. Kress also mentioned that the demand for graphic chips is growing. Nvidia continues to develop and improve its products. The company plans to expand into new industries. Kress emphasized that Nvidia is committed to renewable energy. She added that the company is doing well financially. Overall, Kress was optimistic about Nvidia's future.

Cloud providers worldwide are quickly implementing our Hopper and Ampere GPUs due to the high demand for AI applications. These GPUs are being used for training and inference by both consumers and enterprise companies. Multiple cloud providers, such as Microsoft Azure, Google Cloud and Oracle Cloud Infrastructure, have announced that H100 is available for private previews on their platforms. The GPUs will also be offered by AWS and are available at GPU specialized cloud providers including CoreWeave and Lambda.

Lots of companies want Nvidia's AI chips and they are ordering more from their foundry partner. This was mentioned by Nvidia's CEO in their earnings press release.

Our products are in production. We have H100, Grace CPU, Grace Hopper Superchip, NVLink, Quantum 400 InfiniBand and BlueField-3 DPU. The demand for our products is surging. We are increasing our supply to meet the demand.

Nvidia's data center business did really well last quarter. They made lots of money and beat their sales targets. Demand for AI chips is growing fast. Nvidia thinks this trend will continue.

Nvidia's guidance is very good. They are expecting $11 billion in revenue this quarter, which is 50% more than what analysts had predicted. This is also a 64% increase from last year's revenue of $6.7 billion. Their non-GAAP gross margin is expected to be 70%, a huge jump from last year's 46%. It seems like Nvidia's earnings will increase significantly this quarter.

Is There More Potential For Stock Gains?

Nvidia surprised analysts with its guidance, so the stock could keep going up. Don't forget that Nvidia's generative AI is just starting. A study says the generative AI market could keep growing by 34% per year for the next ten years. It could make $200 billion every year by 2032.

The management of Nvidia said that generative AI is causing exponential growth and a quick change to their accelerated computing. This means that Nvidia's GPUs will be in high demand due to generative AI's rapid growth. Nvidia's GPUs will have an important part in making this technology widespread.

The need for chips that can handle AI tasks is set to increase. It'll go from $17 billion in 2022 to $227 billion a year in 2032. This means there's a lot of growth opportunity for Nvidia's data center business. They already have a large share of the market for AI chips. Because of this, analysts have increased their expectations of Nvidia's growth.

YCharts data shows NVDA's revenue estimates for this fiscal year.

Nvidia had a great run in the market in 2023. It seems like there's still more growth potential. But, investors who haven't bought Nvidia yet will have to pay more. This is due to the AI-driven growth that Nvidia offers.

The tech stock is very expensive at 202 times trailing earnings. However, the company's guidance and potential make it worth it. The company expects to deliver healthy revenue and earnings growth in the long run.

Nvidia's earnings ratio is 53 points. This shows the company's bottom line should improve. The company is expecting big margin gains. Nvidia stock is expensive but it could be a good investment. This is because it could help investors benefit from the use of AI.

Harsh Chauhan doesn't own any of the mentioned stocks. The Motley Fool likes and owns Nvidia. They have a policy of transparency.