Shares of Nvidia (NVDA, Financial) were trending downward today, with the stock price falling to $117.49, a 6.46% decrease. This decline followed the company's fiscal 2025 second-quarter results announcement, which, despite beating expectations on revenue and earnings, left investors unsettled due to lighter-than-expected guidance from management.
Nvidia reported a sequential decline in gross margin from 78.4% to 75.1%, attributed to new data center products and inventory write-downs related to the Blackwell platform. This margin slip, the first in the generative AI era, was a significant factor causing concern among investors, indicating a potential peak in margin expansion.
For the quarter ending July 28, Nvidia's revenue soared by 122% year-over-year to $30 billion, and adjusted earnings per share increased by 152% to $0.68, surpassing analysts' consensus estimates. Despite this strong performance, the gross margin decline took center stage, overshadowing the positive earnings report.
Management has forecasted fiscal third-quarter revenue of $32.5 billion, slightly above the consensus estimate of $31.8 billion. However, this would translate to only 8% sequential revenue growth, which some investors found underwhelming. The anticipated launch of the Blackwell platform in fiscal Q4 appears to be creating modest headwinds for Q3 demand.
Looking at Nvidia's valuation, the company's stock has a GF Value rating of "Modestly Overvalued," with a GF Value of $103.37 per share. For more detailed valuation metrics, you can visit the dedicated GF Value page for Nvidia (NVDA, Financial).
Nvidia (NVDA, Financial) has demonstrated strong growth and profitability metrics. The company enjoys a robust financial position with an Altman Z-score of 70.6, indicating strong financial health. Additionally, its Piotroski F-Score stands at 8, suggesting a very healthy situation.
Despite recent insider selling transactions and the company's stock trading close to its 10-year high, Nvidia remains a market leader in the AI and data center sectors. Investors should consider both the current valuation and growth prospects as they weigh the potential risks and rewards of investing in Nvidia (NVDA, Financial).
