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What’s next for Nvidia stock after strong Q3 report?

What's next for Nvidia stock after strong Q3 report?

Nvidia’s (NASDAQ: NVDA) stock price edged higher on Tuesday, November 21, reaching a fresh all-time high of $504.20. This surge is emblematic of the relentless 2023 rally fueled by the company’s heavy exposure to the booming artificial intelligence (AI) sector. 

The milestone came just ahead of Nvidia’s eagerly awaited earnings report for fiscal Q3 2024, which smashed Wall Street’s expectations. However, intriguingly, the stock did not experience the anticipated significant uptick after the report, leaving investors and analysts questioning the market’s response to the chipmaker’s robust financial performance.

Nvidia’s Q3 results

Before anything else, let’s take a look at Nvidia’s Q3 report.

Notably, the company reported adjusted earnings per share (EPS) of $4.02, blasting past the consensus estimates of $3.37. Net income in the quarter stood at $9.24 billion, marking a jaw-dropping year-over-year increase from the $680 million posted in the same period last year.

Nvidia’s third-quarter revenue surged to $18.12 billion, representing a 206% year-over-year jump and beating the consensus projection of $16.18 billion. 

Looking ahead, the chipmaker expects Q4 revenue of $20 billion, implying a potential revenue increase of nearly 231%. 

So why hasn’t NVDA stock surged?

Before Nvidia unveiled its most recent quarterly results, the chip manufacturer’s shares closed 0.92% lower at $499.44. 

NVDA 1-day stock price chart. Source: Finbold

But contrary to expectations, Nvidia’s stock failed to see a significant upturn in after-hours trading despite the company’s impressive Q3 report. 

The likely reason behind this is Nvidia’s warning of a potential negative impact in the current fourth quarter, citing the recently imposed US restrictions on chip exports to China. 

“We expect that our sales to these destinations will decline significantly in the fourth quarter of fiscal 2024, though we believe the decline will be more than offset by strong growth in other regions.”

– said Nvidia’s finance chief, Colette Kress.

The Biden administration took further measures to curb the sales of high-end AI chips in China. The move was an extension of curb controls first introduced in October 2022.

The restraints could be particularly damaging for Nvidia, which is the world’s top AI chip manufacturer. 

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