Year to date, shares of Nvidia (NVDA) are up an astounding 180% -- and up 37% in the last month alone. Is this stock too hot to handle?
I have been bullish on Nvidia for a while. Back in August, I thought the stock could reach $65. But after an incredible third-quarter earnings report, it seems Nvidia is too hot to handle right now. I would wait for a pullback.
Two weeks ago, Nvidia reported third-quarter fiscal 2017 earnings of 94 cents per share, 26 cents better than the consensus estimate. Earnings per share rose 104%. Revenue jumped 53.6% to $2 billion, vs. the $1.69 billion consensus figure. Revenue rose 40% sequentially!
Gross margin was 59%, up 270 basis points year over year, and up 110 basis points sequentially. Operating income jumped 161% to $639 million.
PC gaming was up 63% to $1.24 billion, driven by the release of its new Pascal-based gaming products. The Pascal products replace the older Maxwell platform. The company claims to have over 100 million gamers using one of its platforms. At its most recent investors' day, management said 70% of the market needs to upgrade. It's taken gamers about three years to move to Maxwell, so the Pascal platform could be a hit for a long time to come.
Data center revenue rose 193% to $240 million. Nvidia's new Tesla/GRID graphics processors are increasingly taking over artificial intelligence, deep learning and supercomputing markets.
Professional visualization revenue rose 9% to $207 million. Engineering, architecture and the entertainment industries are all rapidly adopting the company's solutions for real-time rendering.