The lead-up to Nvidia’s Wednesday’s earnings release produced plenty of jitters on Wall Street, despite expectations of incredible growth. The Q3 results, put out after the bell, did not prompt the massive sell-off some feared, with the AI chip leader’s stock dropping less than 2% in after-hours trading as management spoke to analysts on the call.
Last quarter, a modest revenue and earnings beat was not enough to prevent a massive sell-the-news event, with the stock falling 18% in the week following the call. Some figured the stock could be due for another dip this time around with institutional investors eager to engage in profit-taking at the end the year.
The stock held steady early Wednesday evening, however, as revenue jumped 94% year-over-year to $35.1 billion. The company’s January guidance also came in better than expected, with the chip maker indicating it is confident about the rollout of its next-generation Blackwell platform.
“The age of AI is in full steam, propelling a global shift to NVIDIA computing,” Huang said in a press release. “Demand for Hopper and anticipation for Blackwell—in full production—are incredible as foundation model makers scale pretraining, post-training and inference.”
When it comes to the stock’s short-term movement, investors might not be totally out of woods yet. Options trading ahead of the call implied a move just short of 8% in either direction, according to Bloomberg. That would roughly equate to a $300 billion swing in market value, bigger than the valuations of all but 24 of America’s largest companies.
Regardless, shareholders have been massively rewarded, particularly if they bought before or around the release of ChatGPT in 2022 and subsequent GenAI boom. The stock has appreciate 800% over the last two years, with the company adding more than $3 trillion in market cap to trade places with Apple as the world’s largest company.
Despite Nvidia’s growth running up against the law of large numbers, Wall Street appears optimistic about the stock continuing to reward investors. As of Wednesday afternoon, roughly 90% of analysts surveyed by Bloomberg (or 68 out of 76) had a buy rating on the stock, compared to 8% placing a hold and under 3% advising to sell.
Based on recent earnings and the Street’s expectations, the stock is not incredibly expensive, either. Before the earnings call, the company’s blended price to earnings ratio sat just north of 36, per Bloomberg. That represented just a 24% premium to the semiconductor industry.
Besides the GenAI trade, semis have struggled mightily, Baird managing director Ted Mortonson told Fortune, amid a contraction in autos and flagging industrial demand in Europe. The PHLX Semiconductor Index, commonly known as SOX, is down about 8% year-to-date.
“Nvidia has just been holding up the index,” said Mortonson, who is also a tech desk sector strategist.
On Wednesday, the world’s hottest company continued to deliver.
