The Unpredictable Rise of Nvidia's Revenue
Published Date: 24/06/2024
Nvidia's surge in demand for its chips has made it challenging for analysts to predict its revenue, leading to a conundrum for investors.
Nvidia Corp. is the most expensive stock in the S&P 500 Index, with its shares trading for roughly 23 times the company's projected sales over the next 12 months. However, there's a problem with that valuation. In the age of the artificial intelligence boom, no one can figure out what the chipmaker's revenues are actually going to be not the Wall Street analysts covering Nvidia or Nvidia executives themselves. So how are investors supposed to calculate whether the shares are expensive or not?
FAQs:
Q: Why is it challenging to predict Nvidia's revenue?
A: The surge in demand for Nvidia's chips has made it difficult for analysts to predict its revenue, as supply is the most uncertain variable when demand is booming.
Q: How has Nvidia's sales exceeded estimates?
A: Nvidia's sales have exceeded the midpoint of the company's own forecast by an average of 13% over the past year, with the biggest beat of 23% in August.
Q: What is the concern for investors regarding Nvidia's valuation?
A: The concern is that the degree to which Nvidia surpasses Wall Street's growth expectations will soon start subsiding, making it harder to justify the shares' price tag.
Q: How has Nvidia's stock performed this year?
A: Nvidia has gained 156% this year and briefly became the world's most valuable company at $3.34 trillion, before falling 6.7% and erasing more than $200 billion in market value.
Q: What is the projected profit and sales growth for Nvidia in the current quarter?
A: Nvidia is projected to deliver profit of $14.7 billion on sales of $28.4 billion in the current quarter, up 137% and 111%, respectively, from the same period a year ago.