The headlines on Nvidia’s latest quarter – “beats, but doesn’t wow”, “Good ... not amazing” – were muted.
Growth slowed, guidance disappointed some, and China remains a political minefield.
What mattered more was the market’s shrug: shares in the world’s most valuable company fell less than 1 per cent.
For a company trading near record highs after a dizzying run-up, such resilience suggests investors remain more glass-half-full than half-empty. That optimism has a basis, though.
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Since ChatGPT’s launch, the stock has soared almost 1,000 per cent. Yet before dismissing this as evidence of investor excitability, consider this: Nvidia’s forward earnings estimates, notes Ritholtz Wealth Management’s Matt Cerminaro, have risen even faster, by 1,136 per cent.
The stock is driven by fundamentals, not frenzy. Nine straight quarters of revenue growth above 50 per cent have helped.
The latest quarter was the weakest of that streak, however.
Additionally, Nvidia’s guidance excluded sales of Nvidia’s China-focused H20 chips.
Chief executive Jensen Huang reckons those could be worth $2 billon to $5 billion per quarter if restrictions eased, and that even this is a fraction of a $50 billion market. Huang’s implicit irritation highlights both the scale of demand and the constraints of US export policy.
Bears insist Nvidia’s outlandish 72 per cent profit margins cannot go unchallenged, especially by the very cloud giants that both buy its chips and dream of building their own.
Still, investors appear unmoved. For now, “good, not amazing” still counts as good enough.
