Nvidia (NASDAQ:NVDA) stock has been the world’s most valuable semiconductor plays by market capitalization for some time.
However, after beating earnings by a whopping margin yet again in its fiscal fourth quarter, the stock high a fresh new all-time high above $500 per share.
Now, NVDA stock has given up some of these gains since its earnings report. However, it’s clear that the artificial intelligence-related catalysts that have propelled this stock to these levels are real.
Let’s dive into whether this momentum can continue, and what investors should do with Nvidia following its latest blowout earnings report.
NVDA Stock and Q4 Earnings
In its Q4 earnings report, Nvidia projected revenue at around $16 billion, well above the $12.61 billion consensus estimate of analysts. The forecast indicates a 170% year-over-year sales increase.
Net income surged to $6.19 billion, or $2.48 per share, from $656 million, or 26 cents per share, year-over-year. Nvidia’s GPUs, including A100 and H100 AI chips, play a pivotal role in generative AI applications like ChatGPT.
The company’s revenue doubled from the prior year to $6.7 billion and rose 88% sequentially. CEO Jensen Huang noted the shift of a trillion dollars of data centers toward accelerated computing and generative AI.
Nvidia’s CFO, Colette Kress, stated that the proposed chip export restrictions by the Biden administration would not have an immediate significant impact on the company’s financial results because of strong global demand for its products.
Nvidia Sees Incredible AI Demand
Nvidia’s stock surged to an all-time high after the AI-focused chip maker reported a third consecutive sales forecast beating Wall Street expectations.
Shares jumped 8.7% to $512 ahead of the New York market opening, with projected sales of around $16 billion for the quarter, surpassing analyst estimates of $12.5 billion. This follows Nvidia’s strong previous quarter results and its approval of an additional $25 billion in stock buybacks.
Nvidia remains a prime beneficiary of the AI computing surge, as data center operators seek its processors for demanding AI workloads. This demand has propelled Nvidia’s sales growth amid a global chip slump, marking its strongest growth in years.
Nvidia’s CEO, Jensen Huang, declared the dawn of a new computing era, with global companies embracing powerful computing for advanced AI like ChatGPT.
This has contributed to the stock’s over threefold rise this year. Prior to the quarterly report release, shares ended at $471.16 in New York.
The day after Nvidia’s earnings, the AI trade appears to be in a “show me phase,” according to Citigroup’s Scott Chronert.
He believes the long-term impact of AI on S&P 500 earnings isn’t jeopardized, but expectations need adjustment based on unfolding events and new information.
What Now
Nvidia CEO Jensen Huang stated that a new computing era has started, with companies globally shifting towards accelerated computing and generative AI. Nvidia’s data center and gaming revenues exceeded predictions at $10.3 billion and $2.5 billion, respectively. The company unveiled a $25 billion stock repurchase plan for the current fiscal year.
Nvidia’s earnings report was a crucial evaluation of the ongoing AI hype, prompting various companies to join the trend. However, none have experienced the substantial business transformation seen with Nvidia.
This is a stock I think long-term investors who bought in at much lower levels can continue to hold, and investors looking to put fresh capital to work may look to do so on big dips moving forward.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.