Nvidia Stock: Near Term Growth Is Getting Priced In (Rating Downgrade)

Summary:

  • As feared in my Q2 FY25 preview note, Nvidia Corporation failed to deliver a meaningful revenue guidance beat, which led to a 7% after-hours fall post yesterday’s earnings release.
  • In-line Q3 revenue guidance and in-line revenue results vs. the Wall Street whisper numbers indicate that Nvidia’s high growth is being priced in, at least over the couple of quarters.
  • A dip in the gross margins and a flattish outlook for the rest of FY25 puts a spanner in the works for my earlier margin expansion thesis.
  • Nvidia’s 1-yr forward P/E ratio remains high and mostly unchanged for now at more than 40x and technically vs. the S&P500, there are signs of exhaustion on the monthly upward momentum.
  • I recognize that there are early signs of strong uptake in Blackwell orders. I believe this can lead to growth surprises again from 2025 onwards.

Tired runner laying on track

NVIDIA stock running out of steam in the near term

Paul Bradbury/OJO Images via Getty Images

Performance Assessment

My Q2 FY25 preview note on Nvidia Corporation (NASDAQ:NVDA) communicated a change in stance from my earlier bullish


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