Is Nvidia Still A Good Buy?

🌟🌟🌟Nvidia $NVIDIA Corp(NVDA)$  is up 3% on Friday's trading after Morgan Stanley issued a Bullish report on AI Semiconductor stocks calling Nvidia stock a Top Pick for 2025 with a Target Price of USD 166.  That is an upside potential of 23%!

 After reaching its all time high of USD 152.89 in November, Nvidia's share price has been in a slump and is down 8% in the past month.  However Nvidia is still up 179% year todate. 

Is Nvidia still a good buy?

Let's check out Nvidia's Q3 24 Earnings report.  For the quarter, Nvidia's revenue is up 17% to USD 35.1 billion from previous quarter and a massive 94% from a year ago.  

GAAP earnings per share was 0.78 cents, up 16% from previous quarter and has risen 111% from a year ago.  Non GAAP earnings per share was 81 cents, up 19% from previous quarter and up 103% from a year ago. 

Data centre revenue reached a record USD 30.8 billion, up 112% year on year.   Nvidia's Net Income surged 109% year on year to USD 19.31 billion.  Gaming revenue grew 15% year on year to USD 3.3 billion. 

For the 4th quarter of Fiscal 2025, Nvidia expects revenue to be USD 37.5 billion, plus or minus 2%.  GAAP and non GAAP gross margins are expected to be 73% and 73.5% respectively. 

However Nvidia's shares fell as much as 5% in after hours trading as its 4th quarter guidance appears to be have fallen short of investors expectations. 

Other concerns for Nvidia include worry of slowing demand for current generation Hopper Series products and possible delays and supply constraints for next generation Blackwell series products.  Another concern is that GPUs is facing increased competition from Application-Specific Integrated Circuits (ASICs) from$Broadcom(AVGO)$  and $Marvell Technology(MRVL)$  

Nonetheless demand for Blackwell chips is described as "insane" by Jensen Huang, CEO of Nvidia.     Blackwell chips are sold out for much of 2025 and its buyers are clamouring for more.  Nvidia's key  buyers for Blackwell chips  are Microsoft, Amazon, Meta Platforms and Google, members of the Magnificent 7.  In fact they are continuing to increase their AI related spending so as not to miss out on the AI race to the top. 

Because of the strong demand for Nvidia's chips especially the Blackwell series, Nvidia is able to command premium prices for them. That is why Nvidia's Gross Margin is a robust 74.6% for Q3 24 and will remain in that rage for 2025 and beyond.   This will certainly increase Nvidia's profits  even more. 

Nvidia also announced partnership with SoftBank to build Japan's most powerful AI supercomputer with the Nvidia Blackwell Platform and has successfully piloted the world's first combined AI and 5G telecom network using Nvidia AI Aerial. 

Nvidia has launched Denmark's largest sovereign AI supercomputer which is an Nvidia SGX SuperPOD driven by 1, 528 Nvidia H100 Tensor Core GPUs interconnected using Nvidia Quantum 2 InfiniBand networking. 

Cloud leaders in India, Japan and Indonesia are building AI infrastructure with Nvidia accelerated computing while consulting leaders are helping to speed up AI adoption across industries with Nvidia AI Enterprise Software 

In Singapore, Singtel is launching GPU-as-a-Service not only in Singapore but in South East Asia in Q3 24.  GPUaaS will be powered by Nvidia H100 Tensor Core GPU powered clusters and Nvidia 's GB200 Grace Blackwell Superchips. 

Nvidia' s Forward Price to Earnings ratio is 30.49 which makes Nvidia significantly undervalued when considering its projected earnings growth is 120% this year. 

Wall Street Analysts are bullish on Nvidia with a Buy rating, Average Target Price of USD 177.14, an upside potential of 31% according to Tipranks. 

Nvidia's dominance in the AI GPU market is expected to be difficult for competitors to overcome as it has a technological advantage and continues to roll out new processors that its customers want.   Nvidia's AI GPUs are used in many  AI data centers and the company's CUDA software stack allows developers to accelerate machine learning workloads. 

According to CEO Jensen Huang,  the age of AI is in full steam, propelling a global shift to Nvidia computing.  Demand for Hopper and anticipation for Blackwell are incredible as foundation model makers scale pre training   post training and inference. 

The next catalyst for Nvidia stock could be a keynote speech by Jensen  Huang at the CES Tech Trade show to be held in Las Vegas on January 6.

Is Nvidia still a good buy?  I believe it is as Nvidia is able to consistently beat expectations which further support its long term growth potential with its innovative, technological advanced AI products and dominant market share in the AI sector. 

In the short term, Nvidia shares maybe volatile but what counts is the long term returns for investors.  Nvidia shares have skyrocketed about 27,340% over the past 10 years.  With the explosive growth of its data center business and other areas such as Robotics, EVs, Nvidia is the bellwether of the booming AI market and I certainly want to be part of it. 

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