Why Nvidia Stock Hit New Highs This Week
What happened
Nvidia (NASDAQ: NVDA) blew past already high revenue expectations for the fiscal second quarter ending in July. But just as the stock was breaking out to new highs, the shares pulled back toward the end of the week.
The stock was still up 7.5% week to date in early trading on Friday, according to data provided by S&P Global Market Intelligence.
So what
Nvidia smashed its revenue guidance of $11 billion by reporting $13.5 billion, an increase of 101% over the year-ago quarter. The graphics chip specialist is basically the only game in town supplying the advanced processors, data center networking equipment, and software systems needed to run AI models at scale.
Later this year, Advanced Micro Devices is expected to join the AI arms race when it launches the MI300 chips. For now, Nvidia is running away with the AI chip market, which has sent its stock up 164% over the last year.
Now what
There's one issue to note about the company's forward guidance. Nvidia is calling for another jump in revenue next quarter, with the total expected to reach approximately $16 billion. However, that would be a smaller quarter-to-quarter increase of 18% compared to the previous quarter when management guided for a sequential increase of 52%.
Analysts will certainly notice that lower sequential growth rate and start wondering about the sustainability of the company's recent growth spurt. If next quarter's guidance shows the same trend of decelerating sequential growth, that could weigh on the stock's performance heading into 2024.
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John Ballard has positions in Advanced Micro Devices and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
