More than a dozen Wall Street firms raised their price targets on Nvidia stock after the company's beat-and-raise quarterly report. But Nvidia shares sold off Thursday after the earnings news.
The artificial intelligence kingpin late Wednesday said it earned an adjusted 68 cents a share on sales of $30.04 billion in its fiscal second quarter ended July 28. On a year-over-year basis, Nvidia earnings soared 152% while sales jumped 122%.
For the current quarter, Nvidia forecast revenue of $32.5 billion, up 79%.
While the top- and bottom-line results and guidance were above consensus estimates, they came up short of lofty "whisper numbers." Also, Nvidia guided below views with its outlook for gross profit margins.
Nvidia Stock Slides After Report
On the stock market today, Nvidia stock fell 6.4% to end the regular session at 117.59. With the drop, it closed beneath its 50-day moving average line, a key support level.
"Fast money, momentum traders (are) selling the stock today after a big run past month and lack of enough upside in guide to break the stock out to $130+ range (at least right now)," Mizuho Securities trading-desk analyst Jordan Klein said in a client note.
The "one smudge" on Nvidia's otherwise positive report was its gross margin outlook for the rest of the year, Bernstein analyst Stacy Rasgon said in a client note.
The company's fiscal Q4 gross margin will likely be in the 73% to 74% range as Nvidia ramps its Blackwell series processors, he said. Still, Rasgon believes that is a "very respectable" gross margin and should improve next year.
Rasgon reiterated his outperform rating on Nvidia stock and upped his price target to 155 from 130.
Investors Wanted More
Even though Nvidia beat estimates by most measures, "many investors were still left wanting more," Ed Egilinsky, managing director of exchange-traded-fund firm Direxion, said in a client note. The Nvidia stock drop was a classic "sell-on-the-news reaction," he said.
"The price to perfection and euphoric mindset was reflected in the earnings watch parties," Egilinsky said. "Their forward guidance, although impressive, still fell short of the lofty expectations, particularly on the gross margins."
Nvidia stock is on three IBD lists: IBD 50, Leaderboard and Tech Leaders.
Nvidia ranks second out of 39 stocks in IBD's fabless semiconductor industry group, according to IBD Stock Checkup.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
