HomeBusinessWill Nvidia's blockbuster results be enough to send the stock higher?

Will Nvidia’s blockbuster results be enough to send the stock higher?

Nvidia (NASDAQ: NVDA) was in sizzling form on the stock market in 2024, thanks to the stunning growth the company achieved quarter after quarter, which explains why the market was waiting for the third quarter results of fiscal 2025 (for the three months ended October 27) with bated breath.

The semiconductor giant’s report came out on November 20, and unsurprisingly it delivered stronger-than-expected results thanks to healthy demand for its graphics processing units (GPUs) used in data centers to train and deploy artificial intelligence. (AI) models. However, initial investor reaction to the company’s earnings appears negative as the stock has moved lower in the two sessions following the results.

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Does this mean Nvidia’s white-hot rally has hit a speed bump? Or will the stock overcome this hiccup and resume its journey north to deliver more gains for investors in 2025? Let’s find out.

Nvidia reported record quarterly revenue of $35.1 billion in the third quarter, up 94% from the same period a year ago. This figure was well above the company’s expectations of $32.5 billion and also exceeded consensus estimates of $33.17 billion. Nvidia’s non-GAAP (generally accepted accounting principles) earnings rose 103% from the same period last year to $0.81 per share, well above the consensus estimate of $0.75 per share.

This guidance was the icing on the cake, as Nvidia expects fiscal fourth quarter revenue to hit $37.5 billion at the midpoint. That was slightly higher than the Wall Street estimate of $37 billion. However, the stock fell in premarket trading for a number of reasons.

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First, Nvidia’s revenue expectations for the current quarter would translate into a year-over-year increase of nearly 70% from last year’s $22.1 billion. This indicates a relative slowdown in the company’s growth. Second, the company has targeted a non-GAAP gross margin of 73.5% for the current quarter. That figure was 76.7% in the year-ago period.

However, smart investors should consider looking past both of these factors. The company is still growing at a tremendous pace despite having already achieved a huge revenue base. A 70% year-over-year revenue increase, while slower than previous quarters, is still quite solid when we consider its main rival with a smaller revenue base, AMDhas grown at a much slower pace.

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