Why Nvidia Dipped Despite Blockbuster Q3 Earnings
Nvidia's shares were in the red in Wednesday's premarket despite a blockbuster Q3 2024 report.
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Shares of Nvidia (NASDAQ: NVDA) fell slightly in the premarket trading Wednesday despite a robust Q3 report and upbeat revenue guidance for the fourth quarter. The lack of upside could be attributed to several factors, most notably the anticipated negative impact of chip export restrictions.
Nvidia’s Q3 Revenue Soars 206%
Nvidia reported financial results for the fiscal Q3 2024, beating the top and bottom lines estimates as the AI-driven demand for its high-end chips continues.
The chipmaking giant reported adjusted earnings per share (EPS) of $4.02 in the third quarter, beating the consensus estimates of $3.37. Net income stood at a staggering $9.24 billion, or $3.71 per share, compared to $680 million, or 27 cents per share, in the year-earlier quarter.
Revenue came in at $18.12 billion, up 206% year-over-year (YoY) and well above the estimated $16.18 billion. $14.51 billion of the overall figure came from Nvidia’s data center, above the expected $12.97 billion and 279% higher year-over-year.
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Nvidia Down in Premarket After Robust Report and Q4 Guidance
Going forward, Nvidia expects $20 billion in revenue for the fiscal Q4, implying more than 230% YoY revenue growth. However, despite positive Q3 results and revenue guidance, shares of Nvidia are down in Wednesday’s premarket trading.
The dip can be attributed to a combination of factors: the expected negative impact in Q4 stemming from the recent US restrictions on chip exports to China and other countries.
“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.”
– said Colette Kress, Nvidia’s CFO.
The Tokenist previously reported that the export curb controls may force Nvidia to cancel $5 billion worth of AI chip orders to China. Regarding Q3 earnings, the constraints made no “meaningful impact,” the company said.
Despite a robust earnings report, the subdued performance of Nvidia’s shares could be due to the possibility that the market had already factored in the anticipated gains in the stock. Nvidia’s shares hit an all-time high on Tuesday, bringing its year-to-date gains to roughly 250%.
The chip stock saw unprecedented growth in 2023 amid the ongoing AI boom. Nvidia plays a key role in this tech revolution as its high-end graphics processing units (GPUs) power the most powerful generative AI products, such as ChatGPT.
Do you think the lack of price gains after a blockbuster report indicates that Nvidia’s valuation may have peaked? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
