How do you like NVDA's 24Q4 ER?

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1

It looks like no one has been talking about Nvidia’s recent earning. I’m wondering how you guys think of the earning? Even though NVDA is no longer in many folks’ portfolio, it is still very relevant to the other hardware stocks that are popular on this board.

There are several bearish signs:

  • Nvidia’s QoQ revenue growth rate has been dropping. 17.83% → 15.34% → 16.54% → 12.34%. And Nvidia “only” beat its Q4 guidance by 5% which was less than the usual 7-8% beat.
  • Gross margin dropped to 73%, from 74.6% last Q and from 78.35% in Q1. Management expected it to be in low 70’s in the near term due to blackwell ramp up and expected it to go back to mid 70’s in the second half of year.
  • There are also some smaller revenue streams other than data center which was not doing well, due to issues like supply constraint.

However, there are also good news. For example, Blackwell’s ramp up speed exceeded the management’s expectation and continues to deliver. And next Q’s revenue could have a small re-acceleration, or at least stabilize as long as Nvidia can have a small beat of 3% on their guidance. Blackwell’s demand is still strong and it’s constraint on supply.

With the price drop post earning, NVDA’s PE currently sits at only 41, which appears extremely undervalued considering the growth. Am I missing anything why the market does not like NVDA? CRDO and ALAB also dropped considerably this year, together with many other hardware names.

Cheers
Luffy

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I didn’t think there was anything significant not to like in the report, but I sold out my small position. In my opinion NVDA has likely hit peak multiple. It has become harder and harder for NVDA to surprise the market to the upside. The company will continue to dominate for a long time to come but it may take quite a while for the stock to double again. Because it’s a cyclical stock and the growth is bound to slow eventually, it is only trading at 32 X NTM EPS but seems unlikely to trade higher as growth slows & margins compress. MSFT trades at a higher multiple than NVDA even though NVDA is growing 6x faster.

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