NVIDIA Corporation

NVIDIA Corporation (NASDAQ: NVDA) accelerates computing to help solve the computational problems. NVIDIA Corporation operates in two key segments. The Compute & Networking segment encompasses data center accelerated computing, networking, AI for automotive, electric vehicle computing, robotics, and cryptocurrency mining processors, while the Graphics segment involves GPUs for gaming, cloud gaming services, enterprise workstation graphics, virtual computing, automotive infotainment, and metaverse software.

Recent Financial and Business Updates:

Q2 Fiscal 2024 Summary:

• GAAP:
  • Revenue in Q2 FY24 was USD 13.51 billion, up 88% from Q1 FY24 and up 101% from Q2 FY23.
  • Gross margin reached 70.1%, showing a 5.5-point increase from the previous quarter and a substantial 26.6-point increase from the same period last year.
  • Operating expenses amounted to USD 2.66 billion, up 6% from the previous quarter and 10% from the previous year.
  • Operating income stood at USD 6.8 billion, marking a remarkable 218% increase from the previous quarter and a substantial 1,263% increase from the same period in the prior year.
  • Net income reached USD 6.19 billion, demonstrating a 203% increase from the previous quarter and an 843% increase from the same period in the previous year.
  • Diluted earnings per share (EPS) was USD 2.48, reflecting a 202% increase from the previous quarter and an 854% increase from the same period in the previous year.

• Non-GAAP:
  • Non-GAAP revenue in Q2 FY24 was USD 13.51 billion, up 88% from Q1 FY24 and up 101% from Q2 FY23.
  • Gross margin reached 71.2%, showing a 4.4-point increase from the previous quarter and a substantial 25.3-point increase from the same period last year.
  • Operating expenses amounted to USD 1.84 billion, up 5% from the previous quarter and 5% from the same period in the prior year.
  • Operating income stood at USD 7.78 billion, marking a 155% increase from the previous quarter and a substantial 487% increase from the same period in the previous year.
  • Net income reached USD 6.74 billion, demonstrating a 148% increase from the previous quarter and a 422% increase from the same period in the previous year.
  • Diluted EPS was USD 2.70, reflecting a 148% increase from the previous quarter and a 429% increase from the same period in the previous year.

• Outlook:
  • For the third quarter of fiscal 2024, NVIDIA anticipates revenue to be USD 16.00 billion, plus or minus 2%.
  • GAAP and non-GAAP gross margins are expected to be 71.5% and 72.5%, respectively, plus or minus 50 basis points.
  • GAAP and non-GAAP operating expenses are expected to be approximately USD 2.95 billion and USD 2.00 billion, respectively.
  • GAAP and non-GAAP other income and expense are expected to be an income of approximately USD 100 million, excluding gains and losses from non-affiliated investments.
  • GAAP and non-GAAP tax rates are expected to be 14.5%, plus or minus 1%, excluding any discrete items.

• Highlights:
  • In the Data Center segment, Q2 FY24 revenue reached a record USD 10.32 billion, up 141% from the previous quarter and up 171% from the same period in the previous year.
  • Announced the NVIDIA GH200 Grace Hopper Superchip for AI and HPC workloads, as well as the NVIDIA L40S GPU designed for compute-intensive applications.
  • Introduced NVIDIA MGX, a server reference design for AI and HPC applications.
  • Unveiled NVIDIA Spectrum-X, an accelerated networking platform for AI clouds.
  • Collaborated with global system makers for new NVIDIA RTX workstations and cloud instances with Amazon Web Services and others.
  • Partnered with various companies on AI initiatives, including ServiceNow, VMware, Snowflake, WPP, SoftBank, and Hugging Face.
  • Announced NVIDIA AI Workbench and set records in MLPerf training benchmarks with H100 GPUs.
  • In the Gaming segment, Q2 FY24 revenue was USD 2.49 billion, up 11% from the previous quarter and up 22% from the same period in the previous year.
  • Started shipping the GeForce RTX 4060 family of GPUs and announced the NVIDIA Avatar Cloud Engine (ACE) for Games.
  • Added 35 DLSS games, including Diablo IV, Ratchet & Clank: Rift Apart, Baldur’s Gate 3, and F1 23.
  • In the Professional Visualization segment, Q2 FY24 revenue was USD 379 million, up 28% from the previous quarter and down 24% from the same period in the previous year.
  • Announced three new desktop workstation RTX GPUs based on the Ada Lovelace architecture.
  • Announced a major release of the NVIDIA Omniverse platform and formed the Alliance for OpenUSD with industry partners.
  • In the Automotive segment, Q2 FY24 revenue was USD 253 million, down 15% from the previous quarter and up 15% from the same period in the previous year.
  • Announced NVIDIA DRIVE Orin™ powering the XPENG G6 Coupe SUV's advanced driver assistance system.
  • Partnered with MediaTek for mainstream automotive systems on chips with NVIDIA GPU chiplet IP.

Technical Observation (on the daily chart)

The Relative Strength Index (RSI) observed over a 14-day period registers at 38.49, indicating some more consolidation or a short-term downward movement. Furthermore, the stock's current position is situated below both the 21-day Simple Moving Average (SMA) and the 50-day SMA, potentially acting as dynamic short-term resistance level. The price is currently between USD 400.00-USD 450.00, with a possibility of breakout in any direction. The direction it takes will play a pivotal role in shaping the stock's short to medium-term prospects.

Markets are trading ina highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 30, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.