What's Next for Nvidia After Surpassing Earnings Projections and Announcing a Stock Split?

Nvidia, the well-known chipmaker, has once again outdone itself. The company reported its fiscal first-quarter earnings, and the results have surpassed what analysts expected. This success is largely due to a huge increase in sales for their data center products, driven by the booming demand for artificial intelligence (AI). Additionally, Nvidia announced a 10-for-1 stock split, which has generated a lot of buzz among investors.

Record-Breaking Revenue

For the fiscal first quarter, Nvidia posted a record revenue of $26.04 billion. This figure is more than three times higher than what they reported during the same period last year. Analysts had high hopes, but Nvidia managed to surpass even those expectations. For those new to investing, understanding where to start with the stock market can be crucial in taking advantage of such growth opportunities.

According to data from Visible Alpha, the company’s data center segment was a major contributor, bringing in $22.6 billion in sales. This is a fivefold increase compared to the previous year and breaks the record set in the last quarter.

Nvidia’s net income for the quarter was $14.88 billion, or $5.98 per share. To put this in perspective, in the same period last year, they reported a net income of $2.04 billion, or 82 cents per share. This incredible growth not only beat analysts’ projections but also showcased Nvidia’s strong performance in the market.

The Stock Split Announcement

One of the most talked-about news from Nvidia is their 10-for-1 stock split. What does this mean? Essentially, for every share that an investor currently holds, they will receive ten shares. This move is designed to make the stock more accessible to both employees and investors. By increasing the number of shares, Nvidia hopes to attract a broader range of investors and make it easier for their employees to own stock.

Since the announcement, Nvidia’s stock has been on an upward trend. This trend has been consistent since the 50-day moving average (MA) crossed above the 200-day MA in late January of last year, forming what’s known as a bullish golden cross buy signal. This signal often indicates a strong upward trend, and Nvidia has certainly lived up to it. Over the past 14 months, investors have eagerly bought shares during minor dips in the price.

Interestingly, trading volumes have decreased since the stock hit its record high of $974 in early March. This suggests that larger market players have been cautious, waiting for Nvidia’s fiscal first-quarter report before making their moves.

Looking ahead, Nvidia’s stock seems poised to break out from a three-month consolidation period and reach a new all-time high. If this happens, the stock could continue its long-term upward movement. Investors can project future price targets using a method called a measured move.

This involves calculating the dollar distance of the consolidation period and adding that amount to the breakout point. For example, if we add $210 to the $970 breakout point, we get a projected profit target of $1,180.

For investors who prefer not to chase after rising stocks, periods of weakness might present good buying opportunities. During these times, look for pullbacks to the top trendline of the consolidation period. This area, which previously acted as resistance, is likely to become a support level.

Final Thoughts

Nvidia’s shares increased by 6.1% to $1,007 in after-hours trading, more than doubling since the start of the year. This remarkable performance highlights Nvidia’s pivotal role in the tech industry, especially in the rapidly growing field of AI. As Nvidia continues to innovate and expand, it remains a company to watch for both current and potential investors.