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Is It Too Late to Buy Nvidia Stock?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

NVIDIA Corporation is trading down by -2.48 percent on Monday amidst impactful news revelations. The company’s stock is under pressure following mixed sentiments from recent announcements. One of the most influential headlines highlights concerns over technological advancements and competitive dynamics in the semiconductor industry, potentially signaling challenges ahead. These developments have led to significant market reactions.

Quick overview of recent Nvidia news:

Candlestick Chart

Live Update at 08:11:42 EST: On Monday, September 30, 2024 NVIDIA Corporation stock [NASDAQ: NVDA] is trending down by -2.48%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • ByteDance’s collaboration with TSMC to make AI chips by 2026 could reduce ByteDance’s dependence on Nvidia chips.
  • Nvidia CEO Jen Hsun Huang sold 240K shares, totaling $28.6M.
  • China is urging local firms to buy domestic AI chips over Nvidia’s H20, aimed at mitigating U.S. sanctions, leading to a 3.5% decrease in Nvidia’s stock price.
  • Issues with CoWoS-L packaging delay Nvidia’s B200 model to Q1 2025.

Overview of Nvidia’s Latest Financial Performance and Key Metrics:

Diving into Nvidia’s financials is like peering into a well-crafted landscape painting – every detail meticulously contributes to the big picture. For those tracking Nvidia’s latest earnings, it was like witnessing a dramatic scene unfold. Revenue saw a pulsating growth, ballooning to over $60.92 billion, painting a glowing picture of the company’s relentless innovation in AI and gaming.

If you had a front-row seat to their profitability metrics, you’d feel like you just watched a high-stakes poker game, where Nvidia had an ace up its sleeve. The EBIT margin sparkled at 63.7%, while the EBITDA margin boasted a luxurious 65.4%. These figures highlight Nvidia’s knack for extracting the most from its operations, much like a seasoned chef who turns simple ingredients into a gourmet meal.

Their gross margin — a robust 76% — seems almost too good to be true. It’s a testament to their pricing power and efficiency, a vital ingredient in their success recipe. Imagine you’re setting up a satellite to capture this stellar growth; the profit margin at 55.04% would be the twinkling star illuminating Nvidia’s financial galaxy.

Transitioning from margins to liquidity, Nvidia showcases the agility of a seasoned gymnast. With a current ratio of 4.3, they’re well-prepared to handle short-term obligations, echoing the resilience of a top-tier sprinter ready for any hurdle. Their quick ratio of 3.5, acts like a sprinter’s spikes, ensuring traction in any market terrain.

Turn your gaze to their returns, and you’ll see a treasure trove. Return on assets at 33.68% and return on equity at 56.4% shine brightly, indicating how effectively Nvidia uses its resources. The return on capital, an impressive 39.71%, mirrors a savvy investor’s portfolio, meticulously curated for maximum impact.

Now, let’s zoom into the key financial metrics from Nvidia’s recent report.

In Q2 2024, Nvidia reported total revenue at a breathtaking $30.04 billion. Their EBITDA clocked in at $19.71 billion, underlining their robust operational performance. The net income from continuing operations was an impressive $16.59 billion. This is not just a flash in the pan – Nvidia is a powerhouse, consistently delivering strong financials like a seasoned marathoner maintaining an unwavering pace.

Looking at their cash flow activities, Nvidia’s operating cash flow was a staggering $14.49 billion. It’s like watching a high-speed bullet train zipping past – you can’t miss the momentum. Their free cash flow further solidified their standing at $13.51 billion, underlining they have enough headroom to navigate future investments and pay dividends proactively.

As we delve into their balance sheet, Nvidia had total assets worth $85.23 billion. This includes $14.13 billion in accounts receivable and a whopping $11.13 billion in total liabilities, a clear picture that tells a story of growth balanced with strategic planning.

Despite facing China’s new advisories against purchasing Nvidia’s H20 chips, Nvidia’s stock showcased resilience, reflecting on a marathon-runner’s resolve. The stock’s high beta suggests an adventurous ride – thrilling yet rewarding for those who ride it capably.

Impactful News Articles on Nvidia Stock:

The ballooning headlines around Nvidia in recent weeks give a mixed bag of emotions, each contributing to the wild ride that is their stock price.

More Breaking News

ByteDance Takes Leap with TSMC by 2026: ByteDance’s strategy to make its AI chips in collaboration with TSMC by 2026 created a ripple effect. This move could reduce ByteDance’s reliance on Nvidia. The sentiment here is a mix of curiosity and concern for investors. It suggests a potential decline in long-term reliance on Nvidia, echoing a bittersweet melody in Nvidia’s growth journey. However, Nvidia’s diverse portfolio assures it the agility to pivot and keep evolving.

Sale of Shares by Nvidia’s Visionary Leader: When Nvidia’s own CEO, Jen Hsun Huang, sold 240,000 shares, resulting in a total of $28.6 million, it raised eyebrows. Insider transactions can often be seen as red flags or, at the very least, a caution bell. Investors sat up straight, wondering if this move was simply a routine transaction or a harbinger of leaner times ahead. While insider sales don’t always spell doom, they do add a layer of suspense to Nvidia’s financial saga.

China’s Advisory Against Nvidia’s H20 Chips: Perhaps the most striking twist came with China’s recent advisories, which felt like a gust of wind against a sailboat. The Chinese government’s push for local companies to favor domestic AI chips over Nvidia’s H20 sent ripples through the market, leading to a 3.5% fall in Nvidia’s stock price. The H20 chips are crucial for AI applications, and any restriction, even if merely advisory, resonates strongly with the market.

Delays in B200 Model Due to CoWoS-L Packaging Issues: Nvidia is also facing technical challenges, causing delays in the B200 model due to packaging issues in the CoWoS-L process. These delays push deliveries to Q1 2025, and this is more than just a supply chain hiccup. It’s like waiting for a much-anticipated sequel only to find that the release date has been postponed. The anticipation builds, but so does the anxiety among stakeholders.

Elaborating on the News and Their Implications:

Each piece of news swirling around Nvidia is like an individual brushstroke in a large mural. Let’s bring these strokes together to understand the bigger picture.

ByteDance and TSMC’s Collaboration: The move by ByteDance is significant. Here’s a fresh player in the AI chip game, intending to lessen its dependency on Nvidia. TSMC, being a global leader in semiconductors, adds weight to ByteDance’s aspirations. While this indicates potential future competition, it’s essential to see Nvidia’s current dominance in the AI chip market. Nvidia’s strength isn’t just about the chips but also about the ecosystem they’ve built around them. From CUDA to their data center solutions, Nvidia’s fortress isn’t easily breached.

Jen Hsun Huang’s Share Sale: When the captain of the ship sells a significant chunk of his shares, everyone onboard feels a jolt. Huang’s sale of 240,000 shares worth $28.6 million could be interpreted in many ways. On one hand, it might be viewed as a routine sale for diversification, but on the other, it sparks curiosity about his outlook on Nvidia’s future. Insiders usually have the deepest insight into a company’s health, making such moves highly scrutinized. This move undoubtedly adds an element of suspense and raises questions among the investing community.

China’s AI Chip Advisory: China’s advisory to local companies to shy away from Nvidia’s H20 chips and lean toward homegrown solutions add layers of complexity to Nvidia’s narrative. The H20 chips are pivotal in the AI space, and China’s burgeoning tech landscape relies heavily on such technology. This move by the Chinese government is an effort to bolster its semiconductor industry, which is still catching up to Nvidia’s lead. However, this advisory action, short of a formal ban, keeps the door ajar for future business. A 3.5% dip in Nvidia’s stock in response is more a reflection of market sentiment than a long-term prognosis.

CoWoS-L Packaging Delays: Delays in Nvidia’s B200 model due to packaging issues push deliveries to Q1 2025. Such technical hiccups are not uncommon in high-tech production, but they do create a chain reaction. Stakeholders eagerly awaiting next-gen products might find the delay frustrating, akin to waiting for delayed flights. Knowing Nvidia’s track record of innovation, though, they are likely to overcome these bottlenecks and emerge stronger.

In the grand scheme, Nvidia’s journey resembles a complex, plot-twisting novel. Every development, whether positive or challenging, adds depth to their story. The key takeaway here is Nvidia’s resilience and its ability to adapt and overcome. Their financial fortitude, reflected in strong revenue growth and impeccable liquidity, ensures they’re well-equipped to navigate these turbulent seas.

Investors, seasoned or new, must interpret these signals akin to seasoned detectives piecing together a puzzle. Each piece of news, each financial metric, each insider sale or delay paints a multifaceted picture of Nvidia’s prospects. In the volatile stock market landscape, Nvidia stands as a towering entity, navigating complexities with an eye on future growth and innovation.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”