Two days after the earnings release, Nvidia is down 2.7% (and -3.6% relative to S&P500). It seems that investors are skeptical about Nvidia’s continued rapid growth, just like they were a quarter earlier.
Nevertheless, after the last 7 earnings releases, Nvidia has consistently outperformed the S&P500 through the quarterly earnings release date (outperforming the S&P500 by 3.7% to 44%). See Figure 1.
From the bottom in October 2022 to today, Nvidia’s market cap has increased by 1152% (from $280 billion to $3.5 trillion). During the same period, Nvidia’s annualized quarterly revenue has increased by 536% (from $23.6 billion in Q3 2022 to $150.0 billion in Q4 2024). See Figure 2.
For investors, the most important thing is the company's continued growth - in other words, how much longer can Nvidia grow at this pace... and indeed, quarterly (sequential) revenue growth has already slowed to about 7% in Q4 2024, but 7% quarterly is about 31% annually! For comparison, annual revenue growth for S&P500 companies was about 7% last quarter. Figure 3 shows Nvidia's revenue growth.
How best to summarize the situation after the publication of Nvidia's next results? This is a further continuation of the tug-of-war between skeptical investors and optimistic Jensen Huang, Nvidia's CEO. The main arguments on both sides in the attached table.. enjoy!
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