NVIDIA is set to release its fiscal first-quarter earnings after the market closes on May 22, with analysts expecting it to be a major market catalyst in 2024. Dan Niles, founder of Niles Investment Management, discussed the trajectory of NVIDIA stock leading up to the earnings release and the anticipated launch of its new Blackwell GPU. Despite high expectations, Niles noted that NVIDIA’s stock has been performing well, even in the face of news that Amazon Web Services was transitioning orders to the new Blackwell chips.
Looking ahead to the earnings release, Niles mentioned that expectations are very high for NVIDIA, which could pose a challenge despite the stock’s current performance. However, he also highlighted that the company’s valuation is below its five-year average, which could work in its favor. Despite concerns about customer orders being delayed or canceled in anticipation of the new Blackwell chips, Niles believes that customers will likely wait for the more powerful and cost-effective chips instead.
Niles compared the potential volatility in NVIDIA’s stock to that experienced by Cisco during the internet bubble era, suggesting that there could be rapid fluctuations but overall growth in the long term due to the continued development of AI technology. He also noted that the main risk for NVIDIA is the competition from other companies designing their own chips and software, but the company’s proprietary CA software may give it an edge.
In terms of valuation, Niles pointed out that NVIDIA is trading below its five-year average and has strong growth potential, which could make it undervalued relative to its current growth rate. He emphasized the importance of monitoring the stock’s performance and market reactions following the earnings release.
In conclusion, NVIDIA’s upcoming earnings release is highly anticipated, with expectations set high for the company’s continued growth in the AI market. Despite potential challenges and risks, NVIDIA’s strong performance and valuation suggest that it may have room for further growth in the future.
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https://finance.yahoo.com/video/nvidias-secret-sauce-isnt-just-215047711.html
