The Nvidia (NASDAQ: NVDA) stock price is loitering near its all-time high after the company published strong quarterly results. It is trading at $626 in premarket trading, which is 3.7% below its all-time high.
Nvidia quarterly earnings
Nvidia, the giant technology company, had a spectacular quarter. Its revenue jumped by 84% year on year to $5.66 billion (£3.97 billion). It was also 13% above its revenue in the fourth quarter of 2020.
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The company attributed this performance to the strength of all segments. Its gaming revenue jumped by 11% to $2.8 billion, helped by the GeForce RTX 30 Series GPU. Its Pro Vis revenue rose by 21% to $321 million while the automotive division’s revenue dropped by 1% year-on-year to $154 million. Most importantly, the closely-watched data center income rose by 79% to $2 billion.
Nvidia’s results were better than what analysts were expecting. Indeed, data tracked by SeekingAlpha shows that the company has beaten analysts’ estimates for the past nine consecutive quarters.
Looking ahead, the company expects to generate revenue of $6.30 billion in the second quarter. It also expects to have a GAAP gross margin of 64.6%.
Is Nvidia stock a buy after earnings?
The Nvidia stock price has done well in the past few months because of the strong demand for its GPUs. This happened as more people turned to gaming during the lockdown. This made it one of the must-have lockdown stocks to own. Further, investors were excited about the cryptocurrency industry, where its GPUs are widely used by miners. The company has also benefited from the strong demand for data centers.
Analysts are generally impressed by Nvidia. Those at KeyCorp expect the stock will rise to $700 while those at Baird, Raymond James, and Barclays expect it to rise to more than $650. Most of them point to the fact that the company is continuing to expand its market share against companies like Intel. They also cite the strength of its margins and the coming deal with Arm.
However, some analysts are concerned about the company’s valuation. Nvidia has a market capitalisation of more than $389 billion and a trailing twelve-month (TTM) price-to-earnings ratio of 91. This is substantially higher than the overall S&P PE of 44. It also has a forward PE ratio of 59, which is not cheap.
Other concerns are that the company will see less demand as the economy reopens and that cryptocurrency revenue will slow down because of ESG concerns.
NVDA stock analysis
The daily chart shows that the Nvidia stock price has been in a strong upward trend. This has made it move above the 25-day and 50-day weighted moving averages (WMA). However, a closer look shows that the stock has formed a rising wedge pattern, which is usually a bearish sign. With the wedge nearing its confluence zone, there is a possibility that the stock will have a pullback in the near term.