Nvidia shares slip despite ‘epic’ earnings but outlook remains bullish

Nvidia’s stunning earnings report in May was the event that “catapulted AI into the stratosphere”, Deutsche Bank’s Jim Reid noted last week.

Nvidia’s shares skyrocketed following that report, but the reaction to last week’s earnings was more muted. Although shares dipped last week, Nvidia enjoyed another spectacular quarter.

It reported earnings per share of $4.02 (€3.68), way above analyst expectations of $3.37. Revenue tripled to $18.1 billion, easily topping estimates ($16.2 billion). Revenue guidance of $20 billion also exceeded expectations ($17.8 billion).

It was, one analyst noted, another “epic” quarter. The fact shares nevertheless fell might be seen by bears as evidence Nvidia is priced for perfection and all the good news is baked in.

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[ Nvidia is a bubble, warns Rob Arnott ]

However, while Stocktake often cautions about Nvidia’s hefty valuation (now $1.2 trillion), talk of a share price peak looks premature. Up 240 per cent in 2023, shares rose by a quarter in the weeks preceding earnings, so some consolidation is hardly surprising.

Before last week’s report, one strategist said bears “desperately need a big Nvidia miss”. They didn’t get it, and the fact Nvidia remains just below all-time highs suggests the bulls remain in charge.