Bumper Earnings Likely to Boost Nvidia Further

$2.50 EPS Has Driven All Major Analysts’ Targets Higher

Nvidia Corp’s earnings report for the fiscal third quarter on Wednesday 23 August was notably better than expected, leading to significant gap up by NVDA the day after and a fresh all-time intraday high around $511. This article summarises the key data from Nvidia’s earnings report and takes a quick look at the chart to consider how the price might continue moving.

$2.50 earnings per share compared to the consensus of $1.80 was a positive surprise of about 40%; this was hinted at by four estimates for EPS having been revised up in the month before the release. However, the actual dividend yield remains only 4c per share, making NVDA very unattractive to investors seeking cashflow.

Instead, investors in Nvidia and traders of the CFD on its shares are concentrating on seemingly strong potential for future gains by the price. The statistics are striking:

• Nvidia is now the fifth most valuable public company in the world.
• Deliverable short sellers of Nvidia have lost almost $10 billion so far in 2023.
• The company’s valuation is around seven times that of its nearest traditional competitor, AMD.
• Actual PE for 2023 is 192.5.

Eventually, the growth will have to slow down, but for the next few quarters analysts expect ongoing strong gains in revenue and that Nvidia will continue to outperform both the tech sector and the broad market clearly. Although some tech shares might face challenges from the situation with monetary policy as the Fed remains likely to hold rates high for longer, this doesn’t seem likely to have a strong effect on Nvidia.

On the chart, the price of NVDA closed the gap within one session of the earnings report, which would suggest potential for the uptrend to continue. The slow stochastic doesn’t signal overbought yet while ATR has risen for several weeks and moving averages continue to give a strong buy signal.

Finding an entry here depends primarily on the expected duration of holding; traders looking for a relatively quick movement might prefer to wait for a lower price, possibly even towards the latest support around $405, but be aware that the opportunity could be missed if the price doesn’t reach that low.

Conversely, those intending to maintain their positions for weeks or months who don’t need an entry much lower than the extreme could consider anywhere below around $500 depending on the reaction to Jerome Powell’s comments at Jackson Hole.

In the current situation of ‘AI gold rush’, it’s critical to monitor overall sentiment as well as TA and fundamental factors. Confidence in markets remains quite high now on the whole, but a shift to negativity if it occurs might develop quickly, so monitoring any position closely remains important. Even this situation of a seemingly irrefutable opportunity to buy isn’t risk-free, while euphoria after strong earnings can also trigger greed among buyers.

The opinions in this article are personal to the writer. They do not reflect those of Exness or FX Empire.