NVIDIA Surged to Record Highs after Blockbuster Earnings

Shares of Nvidia soared to all-time highs after the company reported better than expected Q3 earnings for fiscal 2017. Is it time to trade?

On Thursday, after the close of trading, Nvidia reported its third quarter earnings for fiscal 2017 that smashed Wall Street expectations and sent its stock to record highs. Nvidia also delivered a more positive outlook for the current quarter.

The American chipmaker reported adjusted earnings of $0.94 per share on revenues of $2 billion. Wall Street had modeled for adjusted earnings of $0.56 per share on revenues of $1.69 billion. The company did not deliver earnings guidance, but it expects revenues of $2.1 billion (plus or minus 2%) for the current quarter. This is higher than analysts’ expectations of $1.69 in revenue for the current quarter.

Sector Growth

Nvidia witnessed phenomenal growth in all its sectors during the third quarter. The main revenue driver was Gaming products, which pulled revenues of $1.24, up 63% year over year. This was particularly fueled by the company’s Pascal Graphics Card that has been a hit and has lacked competition at the high end of the market.

In addition, Nvidia’s data center segment witnessed a phenomenal growth of 193% to $240 million, and now represents 12% of the company’s revenue. The company’s focus in deep learning is surely paying off, while its chips are experiencing increased demand from providers of cloud based services. Nvidia also reported a strategic partnership with Japan’s FANUC that will help bring new capabilities to automated factories using Artificial Intelligence.

The automotive segment grew 61% year over year to $127 million as the company’s DRIVE PX 2 platform witnessed increased demand from manufacturers of autonomous cars. Nvidia announced during the quarter that it had secured a deal to power Tesla self-driving cars as well as a partnership with China’s Baidu to create a self-driving as well as an artificially intelligent car and mapping system.

Stock Performance

Nvidia has been one of the best performing stocks of the year. It has rallied all year and after the blowout results on Thursday, it surged more than 30% to currently trade at $87.92. It also reclaimed its all-time highs and it is trading with real bullish momentum into the year end. Fundamentals are also aligning, with the company consistently delivering high earnings and revenues. Year to date, the stock has already risen 166% and there is certainly room for even more growth with Nvidia trading at a price to earnings ratio of 57.88 as well as an attractive dividend yield of 0.52%.