Nvidia (NASDAQ:NVDA) recently released its quarterly earnings, once again surpassing analysts’ expectations on both revenue and profit. Despite the positive results, the stock saw a temporary slump, raising questions about whether it remains a good investment. While the days of 100% annual returns may be behind us, Nvidia still holds significant promise. This article will delve into Nvidia’s latest earnings, its valuation, and potential buy opportunities for investors.

Nvidia’s Earnings Report: Key Takeaways

In early 2023, Nvidia’s quarterly revenue stood at $6 billion, primarily driven by its gaming GPU business. However, CEO Jensen Huang’s strategic pivot towards supplying GPUs and data center products to the growing AI industry significantly boosted the company’s financial performance. Just six months later, Nvidia’s quarterly revenue more than doubled to $13.5 billion, and another six months after that, it reached $26 billion. As of the latest earnings report, Nvidia’s quarterly revenue has climbed to an impressive $30 billion, representing a 15% increase from the previous quarter.

This unprecedented growth underscores Nvidia’s leadership in the AI and data center markets. Despite market skepticism, the stock’s upward trajectory over the past two years has been well-founded, based on the company’s solid fundamentals and market position.

Nvidia’s Impressive Margins and Shareholder Returns

Nvidia’s financial strength is further highlighted by its impressive profit margins. The company boasts a gross margin of 75% and a net margin of 54%, both of which are remarkable figures in the tech industry. For Q2 FY25, Nvidia reported GAAP earnings per diluted share (EPS) of $0.67, marking a 12% increase from the previous quarter and a staggering 168% year-over-year increase.

In addition to strong earnings, Nvidia has been committed to returning capital to shareholders. In the first half of fiscal 2025 alone, the company returned $15.4 billion to shareholders through share repurchases and dividends. Furthermore, Nvidia’s Board of Directors has authorized an additional $50 billion for future buybacks, signaling continued confidence in the company’s financial health and growth prospects.

Valuation: Is Nvidia Stock Still Attractive?

Despite Nvidia’s rapid growth, the stock trades at a forward earnings multiple of 49.5x, which is higher than the broader market but below its five-year median of 55.6x. While this valuation might seem steep at first glance, it is justified by the company’s leadership in high-growth sectors

Investors with a long-term perspective might find Nvidia’s valuation reasonable, given the company’s potential for sustained growth. Although the era of 100% annual returns might be over, Nvidia’s leadership in AI, accelerated computing, and data centers ensures that it remains a formidable player in these high-growth industries.

Technical Analysis: Trading Nvidia Stock

Nvidia’s stock price has seen increased volatility in recent months, trading within a $40 range. For investors who utilize technical analysis, this volatility can present tactical trading opportunities. Currently, Nvidia’s stock offers two potential entry points: a breakout above $130 or a pullback to around the $100 level.

Given the stock’s recent performance and the broader market conditions, a breakout could signal further upside, while a pullback might offer a more attractive entry point for those looking to buy on weakness. Either approach could be viable, depending on your risk tolerance and investment strategy.

Should You Invest in Nvidia?

As analysts align their expectations with Nvidia’s growth trajectory, the likelihood of large upside surprises may diminish. However, Nvidia’s long-term potential remains strong. With EPS projected to grow at an average annual rate of 38% over the next three to five years, the stock continues to be a compelling choice for investors looking to capitalize on the AI revolution.

Nvidia’s leadership in critical markets such as AI, data centers, and accelerated computing, coupled with its shareholder-friendly policies, makes it an attractive option for long-term investors. While short-term volatility is to be expected, Nvidia’s strong fundamentals and growth prospects ensure that it remains a top contender in the tech space.

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