To The Moon

Earnings Highlights:

• Nvidia’s both EPS and Revenue beat street expectations.

• Nvidia ( $NVIDIA Corp(NVDA)$ ) remains one of the best growth stocks as the company continues to show a strong growth trajectory; Revenue year-over-year (YoY) growth is 265%, EPS YoY growth is 486%, and the Gross Profit margin is 76.7% (an increase of 10.6 percentage points) in the 4Q24.

• "Accelerated computing and generative AI have reached the tipping point," said Nvidia CEO Jensen Huang.

• Data Center sales to China declined significantly in the fourth quarter due to U.S. government licensing requirements. However, Data Center revenue, which accounts for 83% of the total revenue, still grew 409% YoY.

• During the earnings call, CEO Jensen Huang mentioned that Nvidia is shipping some chip samples to customers in China, but he has not provided a timeline for alternative solutions. He mentioned that this quarter would be about the same as last quarter.

Earnings Guidance for 1Q2025:

• Revenue is expected to be $24.0 billion, plus or minus 2%.

• GAAP gross margin is expected to be 76.3%, plus or minus 0.5%.

Conclusion

• Several big tech companies are collaborating with Nvidia competitors such as Broadcom and Marvell to develop their own custom AI chips, rather than purchasing the expensive Nvidia H100 and A100 GPUs. The potential roadmaps for these custom AI chips may limit Nvidia's revenue growth.

• However, rumors suggest that Nvidia has been in discussions with tech giants to assist them in customizing their AI chips.

• However, considering the current order backlog of Nvidia, it suggests that perhaps the tech giants' own custom AI chips may not be ready for prime time yet, and the said chips may still lag behind the technical superiority of Nvidia's H100 and A100.

• Nvidia's valuation does not appear expensive, and continuous high earnings growth will likely result in cheaper valuations.

• Investors in Nvidia should consider staying invested in the company while closely monitoring the momentum of its earnings growth. If the growth momentum begins to decline, it may no longer justify the high share price, thus providing a valid reason to consider selling the stock.

• Nvidia’s earnings and share price have become the bellwether of the AI revolution. The expected jump in share price tonight should also propel other AI-related stocks.

• We may not only witness short covering from bears tonight but also see nervous bulls, who previously booked profits from Nvidia stock, chase the rally tonight.