On Tuesday, the Nvidia stock price rose by 9.18% as the overall market kicked back. It’s trading at $264.95, 27% above its lowest this week. It’s the biggest semiconductor firm with a $666 billion market value.
Nvidia earnings review
Nvidia and other semiconductor stocks have been highly tensed in the past few months as investors have growing concerns. Ishares Semiconductor EFT (SOXX), which tracks the largest industry giants, has dropped by over 12% from its highest in 2022.
Nvidia will on Wednesday justify its large valuation premium during its quarterly earnings announcement. Analysts predict a growth to $7.43 billion in the fourth quarter due to the holiday season. Nvidia made $7.14 billion in Q3 and $5 billion in the same quarter in 2021.
While business running costs rise, analysts expect a rise in Nvidia’s earnings per share (EPS) to $1.22 in the quarter. Still, there is a possibility of better earnings than estimated, as seen below. 2018 was the last time Nvidia missed.[alt] Nvidia earnings history
Areas to watch in NVDA earnings.
Investors will focus on various things but first will be the firm’s subscription product called GeForce Now. The past few years have seen astounding growth as more people embrace gaming hence the over 14million members in the past quarter.
Analysts will focus on the gaming sector, which is crucial for Nvidia’s growth. The gaming section had a 42% revenue growth to $3.2 billion in the previous quarter. Currently, as more people go back to work and school, analysts continue to watch gaming trends.
Furthermore, the market will focus on its pro visualization division, whose revenue grew by 11% to $577million. The visualization arm is crucial since Nvidia intends to be a leading player in the omniverse industry. One of its products is Omniverse Replicator which uses large amounts of data to train boots.
Nvidia’s stock price will also react to the company’s data centre venture. The segment’s revenue grew by 24% in the third quarter to $2.9 billion.
Is Nvidia a good investment?
Nvidia’s stock price has grown in the past few years. The shares leaped by over 90% in the last five years outperforming the S&P 500.
Nonetheless, this performance has made the firm significantly overvalued since it has a forward PE multiple of 55. The S&P 500 has a forward PE ratio of less than 20, meaning Nvidia is trading at a premium.
Therefore, the stock continues to grow if Nvidia proves it can sustain growth in the future. Regardless of NVDA being a stable firm, it is a high-risk investment at these analyses.
Nvidia stock price forecast
The Nvidia stock price has been in a bearish trend off-late as it moved to a correction point below the ascending trendline shown in blue. At the same time, the stock is trading along the 25-day and 50-day moving averages(MA).
Therefore due to the bearish flag, the NVDA stock price may drop after earnings data.
This article represents the views of the author. Growth stocks are highly speculative assets and the author will not be held liable for any losses.