“Even though fundamentally the company is strong, the expectations are higher and it means that a lot of those positive fundamentals and expectations have more or less been priced into the stock.” – 02:31
Melissa Otto, Head of Visible Alpha Research at S&P Global, joins Remy Blaire to discuss NVIDIA’s recent earnings report. NVIDIA has announced a staggering $46.7 billion in revenue, marking a 56% increase from the previous year. Despite this impressive growth, the company’s shares experience a dip in after-hours trading due to a slight miss in data center revenue, which is critical for its AI chip sales.
Remy and Melissa explore the high expectations surrounding NVIDIA, noting that while the company remains fundamentally strong, the increasing expectations make it challenging for NVIDIA to deliver the outsized surprises that investors have come to anticipate. They discuss the implications of this trend for the company’s future growth potential and what it means for investors.
The conversation shifts to the aggressive investments being made by major players in the AI sector, including OpenAI, Microsoft, Alphabet, Meta, and Amazon, which have significantly contributed to NVIDIA’s stock price nearly doubling since April. Melissa points out that while the consensus for NVIDIA’s sales remains stable, expenses are on the rise due to increased investments, suggesting that the stock may trade sideways unless a meaningful catalyst emerges.
Caution becomes a key theme in their discussion, particularly regarding NVIDIA’s margins and the potential for future growth. Melissa highlights the company’s impressive margin expansion in its data center segment and raises questions about whether it can maintain this momentum amid rising costs associated with new product developments like Rubin and Blackwell.