Quick thoughts on Nvidia’s earnings
Nvidia rose 6% in the after market trading hours to $1007.
Key highlights:
Both Revenue and EPS beat expectations
EPS beat by 9%: $6.12 vs. $5.59 as expected.
Revenue beat by 6%: $26.04 B vs. $24.65 B as expected
10-for-1 stock split’s ex date on June 10th
For example, if you own 10 shares and the pre-split share price is $1000, after the stock split, you would now have 100 shares (10 shares * 10), and the share price would be $100 ($1000 / 10).
$0.10 dividend ex-date on June 11th.
Production shipments of Blackwell will start in the second quarter and ramp up in Q3. The Blackwell chip is twice as fast as Nvidia's current Hopper chip.
2Q2025 Earnings forecast:
Revenue: $28 B expected by Nvidia vs. $26.61 B expected by Wall Street
Gross Margin: 75.5% expected by Nvidia vs. 75.8% expected by Wall Street
Review:
Earnings beat + higher dividend payout + stock split may trigger a short squeeze tonight.
Nvidia is selling its inventory quickly. Days Sales of Inventory (DSI) has reduced from 165 in 1Q2024 to 95 in 1Q2025. However, it is still slightly higher than the 90 in 4Q2024.
Gross Margin is slightly lower than expected. This may be due to intense competition or higher low-profitability sales.
Nvidia tends to provide a relatively conservative forecast and then beat its own forecast on earnings date, which usually results in a rise in share price.
Due to the high base effect, Nvidia will struggle to provide a super strong beat in the next earnings release. However, Amazon AWS has stopped its order of Nvidia’s Hopper chips to wait for the new Blackwell processors, which may signal that other big tech companies might also delay their current orders for the new Blackwell processors. Thus, we may still see some earnings surprises in upcoming quarters.
Nvidia's PE Ratio is inexpensive at 55.34x relative to the 2023 high of 218.45x. The current Bloomberg Analysts Consensus 12-month Target Price for Nvidia is $1061, representing an upside potential of 11.8%. I think you will see more analysts revise up their Nvidia target price soon.
Technical analysis suggests that the next immediate resistance is $1005, followed by $1141 and $1293.
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