The drop followed a rally that accelerated after a 10-for-1 stock split that took effect on June 10. Nvidia’s breathtaking rise and its position as the dominant provider of chips to support artificial intelligence applications have made it emblematic of this year’s tech-driven boom in U.S. stocks.

Nvidia’s stock surge

“The bounce today is a normal technical bounce after a 15% drop in three days; you’re not going to go straight down every single day,” said Tom Hayes, chairman at Great Hill Capital in New York. “It’s a great company, it’s a great CEO, and you have insiders selling three-quarters of a billion worth of stock just as retail investors were getting involved with the split,” Hayes added.

Stock of Nvidia, which last week briefly became the world’s most valuable company, has seen a surge of 154% this year. Nvidia has accounted for nearly 30% of the S&P 500’s year-to-date return as of Monday’s close, according to S&P Dow Jones Indices. The index is up 14.6% this year.

Nvidia’s valuation

The recent selloff of stock has helped ease some worries about Nvidia’s valuation, which now stands at about $3.1 trillion from a high of about $3.3 trillion earlier this month.

“It’s a normal correction for a company that has made a run and gotten a lot of publicity,” said Tom Plumb, chief executive and portfolio manager at Plumb Funds, which has Nvidia as one of its largest holdings. “Until there’s a confirmation that the actual business would justify the slowing of the momentum, I don’t think you’ve reached the all-time peak.”

Options market bullish on Nvidia

Bullishness on Nvidia was evident in the options market, though the stock’s recent share price slide appears to have made traders more cautious.

Nvidia call options, typically used to bet on a rising stock price, outnumbered puts by 1.4-to-1 over the last three sessions, Trade Alert data showed. That compared to a call-to-put ratio of 1.6-to-1 for the prior 10 sessions.

At the same time, Nvidia short sellers, who bet on declines in the stock, have gained $4.97 billion in the past three sessions combined, according to data analytics firm Ortex Technologies.

Meanwhile, retail investors have likely been buyers of the stock on the recent dip, said Mario Iachini, senior vice president of Vanda Research, which tracks the behavior of individual investors.

Nvidia’s shareholder meeting

On Wednesday, at the shareholder meeting Nvidia’s CEO, Jensen Huang said that the company’s advantage in AI chips was due to a bet it made more than 10 years ago. Huang’s comments came following a more than 200% surge in the stock over the past year. Wall Street has been enamored by the company’s dominant position in the AI chip market.

Nvidia recently split its stock 10-for-1, passed a $3 trillion valuation and briefly reached the status of most valuable public company.

The stockholders also voted to re-elect 12 existing directors to the company’s board and ratified PwC as the company’s independent registered public accounting firm for fiscal 2025.

Nvidia’s CEO pay package

Nvidia shareholders were pleased with the company’s performance and approved a nonbinding vote on executive compensation called “say on pay.” Nvidia executives are paid in a combination of salary and various kinds of restricted stock units.

Huang the CEO’s pay package was worth about $34 million during the company’s 2024 fiscal year, a 60% increase since 2023, according to the company’s annual filing.

What makes Nvidia stock so attractive?

Nvidia’s stock story is its resilience and the investor sentiment surrounding its volatility. Despite a significant drop from its highs, Nvidia’s bounce back indicates ongoing confidence in its long-term prospects, particularly in AI and tech innovation. The company’s ability to recover after such fluctuations highlights its strategic importance and the broader market’s perception of its leadership in AI chip technology.

The post Nvidia’s Recovery from $430B Valuation Drop with 7% Stock Surge appeared first on Industry Leaders Magazine.

Nvidia’s share were trading at approximately $131.88 price. Along with Nvidia, Microsoft’s market cap also slipped, to $3.30 trillion. Microsoft shares were down 0.4% at $444.8 in afternoon trading.

Most valuable company race

Nvidia, Microsoft and Apple are in a three-horse race to become the world’s most valuable company. Apple’s market cap was at $3.22 trillion, with its shares down 2.2% at $210.10 in the afternoon.

Dell and Super Micro

Elon Musk said on his X social media platform on Wednesday that Dell and Super Micro are supplying server racks for the supercomputer of his xAI startup, which will be used to expand the capabilities of its AI tool, Grok.

Dell Technologies and Super Micro Computer fell 1% and 0.7%, respectively.

The companies make servers equipped with Nvidia chips, enabling them to capitalize on the surging demand for processors that power virtually every AI application.

Grok 3 model

Musk said earlier this year that training the Grok 2 model took about 20,000 Nvidia H100 graphic processing units and that the Grok 3 model and beyond would require 100,000 Nvidia H100 chips.

“While Microsoft both spends and makes money in AI, Nvidia only makes money and lots of money and profits in AI. That’s why you cannot spell Nvidia without AI,” said Jake Dollarhide, chief executive officer, Longbow Asset Management.

Stock update

Nvidia’s share price has nearly tripled so far this year, powering the gains in the broader market. Super Micro shares have more than tripled in value during the same period, while Dell’s stock is up nearly 95%.

“This will be a tech market in which the strong will get stronger as AI technology helps Big Tech Stalwarts monetize their massive installed bases across the enterprise (Microsoft, Oracle, Dell, Amazon, etc.) and consumer landscape (Meta, Apple, Google) over the coming years,” said Wedbush Securities analyst Dan Ives.

The Philadelphia SE Semiconductor Index has risen nearly 34% since the most recent low in April and closed at a lifetime high on Tuesday.

The post Nvidia Loses Ground to Microsoft in Market Cap Race as Stock Slip appeared first on Industry Leaders Magazine.

“We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions,” Nvidia’s finance chief, Colette Kress, said in a letter to shareholders.

Nvidia stock rebound

Nvidia’s earnings for Q3 exceeded expectations, prompting an initial 2.5% decline and later a rebound to close at just under $500.

Nvidia’s earnings for Q3 revenue of $18.12 billion, 12.5% above expectations, was driven by robust growth in the data center and gaming segments.

As per Nvidia’s earnings call despite potential Q4 challenges, it remains optimistic, with analysts forecasting upward revisions. This along with a consensus Nvidia share price target of $642.

Nvidia’s earnings report

Here’s how the company did, compared to the consensus among analysts surveyed by LSEG:

• Nvidia’s Earnings: $4.02 per share, adjusted, vs. $3.37 per share expected
• Revenue: $18.12 billion, vs. $16.18 billion expected

Nvidia’s revenue grew 206% year over year during the quarter ending Oct. 29, according to a statement. Net income, at $9.24 billion, or $3.71 per share, was up from $680 million, or 27 cents per share, in the same quarter a year ago.

Nvidia’s revenue in all segments

The company’s data center revenue totaled $14.51 billion, up 279% and more than the StreetAccount consensus of $12.97 billion. Half of the data center revenue came from cloud infrastructure providers such as Amazon, and the other from consumer internet entities and large companies, Nvidia said.

Healthy uptake came from clouds that specialize in renting out GPUs to clients, Kress said on the call.

The gaming segment contributed $2.86 billion, up 81% and higher than the $2.68 billion StreetAccount consensus.

With respect to guidance, Nvidia called for $20 billion in revenue for the fiscal fourth quarter. That implies nearly 231% revenue growth.

Nvidia’s new additions

During the quarter, Nvidia announced the GH200 GPU, which has more memory than the current H100 and an additional Arm processor onboard. The H100 is expensive and in demand. Nvidia said Australia-based Iris Energy, an owner of bitcoin mining data centers, was buying 248 H100s for $10 million, which works out to about $40,000 each.

Computing instances based on the GH GPUs are coming soon to Oracle’s cloud, Kress said on the call.

As recently as two years ago, sales of GPUs for playing video games on PCs were the largest source of Nvidia’s revenue. Now the company gets most revenue from deployments inside server farms.

Nvidia’s GPU demand rose

The introduction of the ChatGPT chatbot from Microsoft-backed startup OpenAI in 2022 caused many companies to look for ways to add similar generative artificial intelligence capabilities to their software. Demand for Nvidia’s GPUs strengthened as a result.

Nvidia faces obstacles, including competition from AMD and lower revenue because of export restrictions that can limit sales of its GPUs in China. But ahead of Tuesday report, some analysts were nevertheless optimistic.

“GPU demand continues to outpace supply as Gen AI adoption broadens across industry verticals,” Raymond James’ Srini Pajjuri and Jacob Silverman wrote in a note Monday to clients, with a “strong buy” recommendation on Nvidia stock. “We are not overly concerned about competition and expect NVDA to maintain >85% share in Gen AI accelerators even in 2024.”

Nvidia is still working on its plan to grow supply throughout next year, Kress said on the call.

Nvidia stock update

Excluding the after-hours move, Nvidia stock has gone up 241% so far this year, vastly outperforming the S&P 500 index, which is up 18% over the same period.

The post Nvidia Earnings Call: Bullish Longterm Outlook appeared first on Industry Leaders Magazine.