With Nvidia’s NVDA quarterly release now in the rearview, the 2024 Q4 reporting cycle for the broader Mag 7 group has officially ended. Most members in the elite club reported solid top and bottom line growth, though not all saw a favorable post-earnings reaction.
The same can be said for Nvidia shares, which are facing a bit of pressure following the release of its results. Shares haven’t seen much positivity over the past three months overall, down roughly 2%.
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Given the negative price action post-earnings, it raises a valid question – were the results bad? Let’s take a closer look.
NVDA Results Reflect Healthy Demand
Concerning headline figures in the print, quarterly sales of $39.3 billion shot 78% higher from the year-ago record, also reflecting a new quarterly record. Adjusted EPS of $0.89 reflected 71% growth YoY, also beating our consensus estimate by nearly 6%.
The big growth on headline figures is undoubtedly reflective of a positive demand picture, a trend we’ve become very accustomed to over recent periods. Of course, Data Center results were the highlight of the print, which again were rock-solid.
Data Center revenue totaled a record $35.6 billion, up more than 90% YoY and an impressive 16% sequentially. Notably, the reported figure beat out our consensus estimate by $2.0 billion, continuing its recent streak of outsized beats.
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Many were curious about Blackwell developments, which is the successor to Hopper. Concerning Blackwell, Jensen Huang, CEO, stated –
“We’ve successfully ramped up the massive-scale production of Blackwell AI supercomputers, achieving billions of dollars in sales in its first quarter. AI is advancing at light speed as agentic AI and physical AI set the stage for the next wave of AI to revolutionize the largest industries.”
Below is a chart illustrating Nvidia’s Data Center sales on a quarterly basis over the last seven periods.
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Demand for Blackwell remains rock-solid, a trend that’s expected to continue as companies keep wading into the AI space. Nonetheless, the rosy demand picture hasn’t been enough to perk shares up over the past three months, down 2% and modestly underperforming relative to the S&P 500.
Shares aren’t expensive on a relative basis, with the current 30.6X forward 12-month earnings multiple nowhere near the five-year median and a fraction of five-year highs of 106.3X. Further, the PEG ratio works out to 1.5X, again well beneath historical values.
Keep in mind that shares were considerably more expensive throughout 2020 and 2021, a time when the AI theme had yet to grip the market.
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Nvidia expects $43.0 billion (plus or minus 2%) in sales for its next release, continuing its steep growth trajectory nicely.
Putting Everything Together
While the initial share reaction is negative, the results were overall solid, with NVIDIA NVDA continuing to be the AI favorite thanks to its consistently robust Data Center performance.
Shares continue to reflect a prime selection for those looking to ride the AI wave, with the demand picture expected to remain bright, underpinned by positive commentary from CEO Jensen Huang regarding the Blackwell architecture and the growing demand for compute power overall.
While the sideways action over recent months has undoubtedly frustrated some, the stock certainly needed a period to cool off after the massive multi-year run.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
