TOP STORY
📉 Nvidia Down 2% This Morning Despite Another Strong Earnings Report

😬 The market has been full of panic recently - with DeepSeek calling AI spending into question, bad economic data last week causing the stock market’s worst day of the year, and uncertainty around tariffs…

😰 According to the Fear and Greed Index, all this has plunged the market into Extreme Feed (in sharp contrast to 1 year ago today when the market was in a state of Extreme Greed)

🙏 But even though investors were fearful, there was hope. Hope that Jensen Huang, (the CEO of Nvidia) would swoop in to save the day with another blowout Nvidia ($NVDA) earnings - as he has done many times before…

🏈 Nvidia’s earnings have truly become the ‘Superbowl’ of the stock market. The world stops, and investors hold their breath in hopes that Nvidia can continue to carry the market - driven by AI hype and optimism - on its shoulders. Wedbush Analyst Dan Ives even called the earnings call a “massive test for a wobbling stock market.”

📊 And even if you don’t hold Nvidia directly, if you hold any S&P 500 ETFs (like $ZSP, $VFV, or $VOO) - 6% of those holdings are in Nvidia - so it’s worth paying attention.

🤿 So, without further ado, let’s dive into the numbers…

🤑 Nvidia Revenue Soars 78%, Beating Profit Expectations by 12.8%

• 💰 Revenue: $39.3B, up 78% from last year, but only 0.5% higher than analysts expected

• 🎯 Forward Revenue Targets: $43B, equal to analysts expectations

• 💸 Net income (profits): $22.1B, up 71% from last year, 12.8% higher than analysts expected

• 📉 Stock Price: Up 2.4% on market open (but is down ~2% since and fluctuating rapidly 😅)

✨ Highlights

• 🤖 The biggest revenue driver by far was Nvidia’s AI-driven data center revenue - which grew 93% year-over-year and makes up over 90% of revenue.

• 🚗 Auto & Robotics revenues (which I find as one of the most exciting areas based on Jensen Huang’s comments at CES) grew even faster at 103% year-over-year but still makes up only ~1.5% of the total business.

• 🚀 One of the biggest growth drivers for Nvidia is its new Blackwell AI chip (which is replacing its Hopper chips). This was the first quarter that included Blackwell sales, with over $11B in revenue reported for the quarter. According to Jensen Huang:

😰 Concerns

The #1 concern for Nvidia has been and continues to be its slowing growth. Despite the strong numbers, this was the weakest top and bottom line growth for Nvidia since April 2023.

Nvidia also posted a slight decline in gross profit margins due to a “transition to more complex and higher cost systems” within the data centres.

As a result, some have been calling the quarter ‘good-but-not-great’ (likely contributing to the stock drop this morning). The challenge with Nvidia is it’s become the expectation that they’ll crush earnings and as one commentator puts it, “the market is not impressed unless it is a blow-out beat and raise”.

Even so, as Derek Saul from Forbes points out:

🤔 Overall though, how are analysts (and the Blossom community) reacting to these numbers? Before we take a look, a quick word from today’s sponsor Wealthsimple!

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TOP STORY CONTINUED
🤔 How Analysts (and Blossom) Are Reacting to Nvidia’s Earnings

Overall, analysts were extremely positive about Nvidia’s earnings - with many raising their price targets. According to data from TipRanks, Nvidia remains a ‘strong buy’ among analysts.

🎯 Here are some of analyst’s key comments:

📈 JPMorgan - keep overweight rating, maintained $170 price target (30% above current share price)

📈 Morgan Stanley - keep overweight rating, raised price target from $152 to $162 (25% above current share price)

📈 Bank of America - keep overweight rating, raised price target from $190 to $200 (53% above current share price)

For more analyst comments, if you have CNBC PRO you can see them here, but since I assume many of you don’t, I’ll try to post them on Blossom right after I send this out!

One thing that jumped out to me was some of the analyst comments on Nvidia’s valuation. In the past 2 years, there have been many comments about Nvidia being wildly overvalued, but here’s what analysts had to say about that:

• [Nvidia] now trades in the low 20x fwd P/E with the biggest risk to this year accounted for. (Citi, $163 price target)

• Valuation looks attractive at 23x CY26 EPS and stock offers an attractive entry point. (Barclays, $175 price target)

• At around 30x forward earnings the valuation still doesn’t look overcooked. (Hargreaves Landsdown)

⭐️ Overall, reactions were very positive, but as one analyst points out, expectations are so high that even with great results the market is still very volatile:

🦸‍♀️ While the results were great, it seems Jensen Huang hasn’t quite ‘saved the day’, and unfortunately it looks like it’s not quite smooth sailing for the ever-fearful markets…

🌼 Blossom’s Thoughts

Based on Blossom data, Nvidia was the #4 Most Sold stock this week and only the #7 Most Bought and ranks as the #1 Most Held Stock in the US and the #3 Most Held stock in Canada (after Enbridge and TD)

As the #1 Most Mentioned there’s been a ton of awesome posts from the community sharing their perspectives so make sure you visit the NVDA stock page on Blossom to join in on the discussion!

💡 My Thoughts

As I shared on Blossom on Jan 30th - I recently added Nvidia to my portfolio (on top of my exposure to the stock through the S&P 500) after Jensen’s announcements at CES. If you want to reach my rationale for the buy see my full post here!

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