For Immediate Release
Chicago, IL – November 20, 2024 – Zacks.com announces the list of Stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NVIDIA Corporation NVDA, Super Micro Computer, Inc. SMCI, Meta Platforms, Inc. META, Microsoft Corporation MSFT, and Amazon.com, Inc. AMZN.
Here are highlights from Tuesday’s Analyst Blog:
NVIDIA Stock: Buy, Hold, or Sell Before Q3 Earnings?
From the initial public offering (IPO) at the beginning of 1999 till last year, NVIDIA Corporation has given an annualized compounded return of 33%, the best growth rate in the past two decades of trading in U.S. stock exchanges.
This year, NVIDIA joined the Dow as it became the barometer of the expanding artificial intelligence (AI) industry, and is currently the most valuable company. NVIDIA’s shares have soared 186.8% this year.
Therefore, market participants are eagerly anticipating NVIDIA’s third-quarter fiscal earnings report, which could significantly impact its share price and the broader tech sector.
They are contemplating selling NVIDIA’s shares and booking profits or buying them hoping for better future returns. Let us thus look at how investors should play the NVIDIA stock ahead of its earnings.
NVIDIA Stock May Get a Short-Term Boost From Q3 Results
AI server components are necessary for NVIDIA’s AI-related products, and any operational disruptions from suppliers may impact the semiconductor giant’s fiscal third-quarter results.
Regarding such suppliers, Super Micro Computer, Inc.’s financial instability and recent criticism from Hindenburg Research raised concerns about the company’s capabilities to meet NVIDIA’s demands.
However, the increasing adoption of AI and several other data-intensive applications would boost NVIDIA’s AI and data center business in the fiscal third quarter.
The increase in demand for graphic processing units (GPUs) among Meta Platforms, Inc. and Microsoft Corporation, to name a few, should continue to improve NVIDIA’s operational profitability in the reporting quarter.
NVIDIA anticipates an 80% surge in sales to $32.5 billion in the reporting quarter due to strong demand for current-generation Hopper GPUs. The company is projected to report earnings per share of $0.74 for the fiscal third quarter, up over $0.40 from the previous year, showing an 85% increase.
NVIDIA’s average four-quarter earnings surprise is a positive 12.7%, implying that it has a fair chance to display earnings growth in the upcoming earnings release on Wednesday, after the bell, likely impacting its stock positively.
Factors Boosting NVIDIA’s Long-Term Share Price
Encouraging fiscal third-quarter earnings reports may have a short-term positive impact on the share price. However, several other factors may lift NVIDIA’s share price in the long run.
On the third-quarterearnings call NVIDIA is expected to share positive news about its much-awaited next-generation Blackwell GPU, demand for which is already insane, per CEO Jensen Huang. The new B200 chips have more AI throughput than H100 chips and have already been booked for the next 12 months, claimed management.
While Blackwell GPUs are poised to generate high revenues from the fourth quarter onward due to increased production, capital expenditures rising among NVIDIA’s customers should also enhance profit margins and raise the stock price. For instance, Amazon.com, Inc. and Meta expect their capital expenditures to increase to $75 billion and $40 billion in 2024 due to an increase in AI demand.
Anyhow, NVIDIA’s strong fundamentals make it the most valuable company, unswervingly boosting its share price. NVIDIA has steadily increased its cash flow and is expected to witness notable growth from Blackwell-related revenues.
The company’s free cash flow jumped from $4.3 billion in FY20 to $26.9 billion in FY24. This helped NVIDIA settle obligations and expand business through reinvestments.
NVIDIA has efficiently managed its expenses since it has a net profit margin of 55%, higher than the Semiconductor - General industry’s 47.3%. Any reading above 20% shows a high profit margin.
NVIDIA also generated profits proficiently as its return on equity (ROE) of 120% surpassed the industry average of 78.3%, indicating that its net income exceeds equity.
NVIDIA Stock is Less Pricey – Here’s How to Trade it
NVIDIA’s strong cash flows, capability to make profits competently, manage costs efficiently, increase in customer’s capital spending, rising demand for Blackwell, and projected year-over-year uptick in third-quarter earnings are expected to drive up the NVDA stock value, presenting an attractive buying opportunity (read more: This Is Why NVIDIA Joined the Dow; And Why It's Time to Buy).
Additionally, buying the NVDA stock won’t burn a large hole in your pocket. Per the price/earnings, the NVDA stock trades at 49.4X forward earnings, less than the industry’s 58.5X forward earnings multiple.
NVIDIA currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
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Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpAmazon.com, Inc. (AMZN) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report
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