Trading Nvidia Post Q4 Earnings
Nvidia posted its latest fiscal fourth-quarter earnings report. Investors were keen to see how chip demand for artificial intelligence (AI) apps such as ChatGPT would affect earnings.
Learn more about the earnings report, what the analysts are forecasting for the stock and how to trade it below.
|Symbol for Invest.MT5 Account:||NVDA|
|Date of Idea:||1 Mar 2023|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Nvidia Q4 Earnings Report
Here are some of the key highlights from the latest fiscal fourth-quarter earnings report from Nvidia:
- Earnings per share of 88 cents vs 81 cents expected
- Revenue of $6.05 billion vs $6.00 billion expected
- 21% fall in revenue to $6.05 billion from $7.64 billion
- Expecting first-quarter sales rise to $6.50 billion, higher than expected
- Data centre revenue (including GPUs for AI) up 11% annually to $3.62 billion
- Gaming revenue down 46% from same time last year as expected
Nvidia beat market expectations on both earnings per share and revenue even though it was a decrease year over year. Investors were mainly focused on how the chipmaker is capitalising on the trend in artificial intelligence.
The revenue from Nvidia’s AI chips is encompassed within its data centre business revenue which grew 11% annually to $3.62 billion. Nvidia’s CEO Jensen Huang explained that AI is at an inflection point which is driving all types of businesses to Nvidia’s chips to produce and deploy machine learning software.
The growth in AI has led Nvidia to forecast first quarter sales to be around $6.5 billion which is higher than analyst expectations. However, AI is still relatively new and may take some time for businesses to adopt its full use. There are also rival startups such as South Korea’s Sapeon that is building new AI chips making it a fast paced and competitive sector.
One concern is the 46% drop in Nvidia’s gaming revenue division. Historically, Nvidia has been the go-to for gaming devices and where much of its revenue has come from. The drop in revenue is down to lower demand for chips from its clients due to an oversupply from the pandemic. The company didn’t provide any guidance on when this revenue stream would pick up again.
Another consideration is that the stock is already up nearly 70% this year so far. Much of the anticipation around Nvidia’s AI offering may already be priced into the market.
Nvidia Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for an Nvidia stock forecast in the past 3 months, there are currently 25 buys, 6 holds and 2 sell ratings on the stock. The highest price level for a Nvidia stock forecast is $350.00 with the lowest price target at $175.00.
The average price target for a Nvidia stock forecast is $256.39.
An Example Trading Idea for the Nvidia Stock Price
An example trading idea for the Nvidia share price could be as follows:
- Buy the stock on a break above the post earnings high at $241.00.
- Target just below the highest analyst price target of $350.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Nvidia shares:
- If target is reached = $1,090.00 potential profit ($350.00 - $241.00 * 10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering the fact the stock ended last year in the negative.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Nvidia stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Nvidia Stock in 4 Steps
With Admirals, you can buy shares in companies like Nvidia with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
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Do You See the Nvidia Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Nvidia's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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