Nvidia Rebounds From $108 to $289! Will You Add Ahead of Earnings?

$NVIDIA Corp(NVDA)$ will release earnings soon.

Nvidia's share price is currently trading at $289.53, rebounding from $108 in last October. However, it's still lower than the high point of $346 in 2021.

From 300 to 100: Cyclical Stocks Suffer Consecutive Hits

1) Revenue growth rate turned to negative in 2022

In August 2022, NVIDIA's second-quarter revenue fell significantly below expectations, causing a sharp drop in its stock price.

NVIDIA's total revenue was $6.7 billion, below the company's guidance of $8.1 billion, with a year-on-year growth rate of only 3%.

Subsequently, NVIDIA's revenue growth turned negative. In the third quarter, NVIDIA's overall revenue was $5.93 billion, a 16.5% decline compared to the same period last year, marking the return to negative growth after 11 quarters.

2) Key Gaming business was hit as bitcoin plunged

Gaming is one of NVIDIA's core businesses, accounting for a high proportion of its revenue. NVIDIA's gaming graphics cards can be used for mining.

The collapse of the gaming business also occurred at the end of 2018 when the global economy was sluggish and the price of Bitcoin dropped from $6,400 to $3,183.

3) US government limited the export of Nvidia’s high-performance chips

Nvidia said in an SEC filing that the US government controls sales of high-performance AI chips for servers, the A100 and H100, to China and Russia. The export control might lead to $ 400mln losses in 3Q.

Inventories peak and chip demand surges: Nvidia rose from $108 to $289

1) Q4 earnings signals Nvidia hit the bottom

Nvidia's revenue declined 20.8% year-over-year in the fourth quarter, continuing to deteriorate from -16.5% in the third quarter. 

But on a sequential basis, revenue has stopped declining.

Since mid-2022, when Nvidia entered its downward cycle, investors have been trying to find signals of a cycle reversal in quarterly earnings reports. Now looking at the four quarterly reports, several indicators are signaling a new up cycle is coming.

2) AI heat brought by Chatgpt increases demand for chips

The ChatGPT heat has taken AI to new heights.

Jensen Huang, CEO of Nvidia, is full of praise for ChatGPT and believes it will have a huge impact on all industries. Meanwhile, powerful arithmetic GPUs will significantly benefit from the AI heat.

NVIDIA Is Poised to Dominate the AI Inferencing Chipset Market

From gaming graphics cards to virtual currency mining, Nvidia has managed to enjoy the dividends of the time and now come out of the last semiconductor cycle.

ChatGPT's heat will help NVIDIA take off again.

Wall Street expects Nvidia to earn 70 cents per share on revenue of $5.8 billion.

Will you add Nvidia ahead of its earnings?

How will you trade Nvidia’s earnings?