Why Are Nvidia Shares Falling Today After Earnings Blast?


Investors eagerly awaited fiscal fourth quarter results Nvidia (NASDAQ: NVDA) yesterday The artificial intelligence (AI) leader did not disappoint. Nvidia beat estimates and provided guidance well above most expectations.

Why, then, are shares down 4.4% as of 11:11am ET today? The answer is interesting and gives investors a good reason to potentially take advantage of today’s dip.

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Nvidia headquarters with sign and logo in front.
Image source: Nvidia.

Nvidia’s quarterly revenue hit a record $68.1 billion, marking a 20% increase over the third quarter and a 73% increase compared to the same period last year. Even more promising was the company’s guidance of about $78 billion in revenue for the current quarter. This would represent another amazing quarter with revenue growth of 77% year over year.

So it’s hard to explain why Nvidia shares are falling after the update. This kind of growth is unheard of for such a large company. After all, Nvidia’s market cap is over $4.5 trillion. It remains highly profitable, with gross margins around 75%. That could be what makes investors sell, though.

Investors seem to think it’s too good to be true. These excellent margins have nowhere to go but down. But that doesn’t have to be the case. The company will launch its next-generation Vera Rubin platform later this year, which will be much more energy efficient. Customers are likely to continue lining up for their products.

With the stock floundering now this year, investors should take advantage of the dislocation between an incredible business with high margins and share price movement that doesn’t reflect that success.

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