Post-earnings checklist for Nvidia Investors

Results analysis - Beat or miss?

• Earnings per share (EPS): Did the EPS meet or exceed analyst expectations? Analyze any significant deviations and understand the reasons behind them.
  • Earnings per share (EPS):
    • Q1 FY2025 EPS: $5.98 (GAAP), $6.12 (Non-GAAP)
    • Comparison to Analyst Expectations: Nvidia's EPS significantly exceeded expectations, up 629% from the same quarter last year (GAAP), and up 461% (Non-GAAP) (NVIDIA Newsroom).
       
• Revenue: Was the reported revenue in line with expectations? Look for trends in sales growth or declines.
  • Revenue:
    • Q1 FY2025 Revenue: $26.0 billion
    • Comparison to Analyst Expectations: Nvidia's revenue grew 262% year-over-year, demonstrating strong performance and surpassing expectations (NVIDIA Newsroom).
       
• Other financial metrics: Examine margins, operating income, and cash flow for a comprehensive understanding.
  
  • Gross Margin: 78.4% (GAAP), 78.9% (Non-GAAP)
  • Operating Income: $16.9 billion, up 690%
  • Net Income: $14.9 billion, up 628% (NVIDIA Newsroom).
     
• Financial statements: In-depth review: Go beyond the headlines to scrutinize the balance sheet, income statement, and cash flow statement for any red flags or areas of strength.
  
  

  Looking beyond these figures, the balance sheet, income statement, and cash flow statement show significant strength. For instance:

  • Total Assets: $77.1 billion, up from $65.7 billion last quarter
  • Total Current Assets: $53.7 billion, up from $44.3 billion
  • Net Income for Q1 FY2025: $14.9 billion, up from $2.0 billion last year
  • Ten-for-one forward stock split effective June 7, 2024 (NVIDIA Newsroom).
    (a stock split could be beneficial by making the shares more affordable to a broader range of investors, potentially increasing demand, but it could also be seen as negative if it indicates the company is artificially inflating its stock price without underlying growth)

Future outlook

• Guidance: Next quarter/year expectations: Pay close attention to the company's guidance. Are the projections optimistic or cautious? How do they compare to previous forecasts?
   
  
  • Next quarter/year expectations:
  • Revenue: Nvidia expects Q2 FY2025 revenue to be approximately $28.0 billion, plus or minus 2%.
  • Gross Margin: GAAP gross margins are expected to be 79.0%, plus or minus 50 basis points.
  • Operating Expenses: GAAP operating expenses are projected to be around $3.5 billion (NVIDIA Newsroom).
     
• Strategic initiatives: New projects and partnerships: Consider any new ventures, partnerships, or market expansions mentioned during the earnings call. Assess their potential long-term impact on the company.
  
  
  • Collaboration with Google: Nvidia continues to optimize its data center and AI platforms with Google.
  • Expansion with AWS: Hosting NVIDIA® DGX™ Cloud on Amazon Web Services.
  • Partnership with Amgen: Using NVIDIA DGX SuperPOD™ for drug discovery and diagnostics (NVIDIA Newsroom).

Investment thesis

• Revisit your thesis: Alignment with original thesis: Does the latest earnings report support your original investment thesis? Ensure your reasons for investing in Nvidia still hold true.
• Adjustments: Valuation and forecast updates: Based on the new information, you might need to adjust your valuation of the company or your forecast for its future performance.

Staying informed

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Portfolio enhancement strategies

• Risk management and diversification: Balancing your portfolio: Consider strategies to balance your portfolio in light of the earnings results. This may involve adjusting positions to manage risk effectively.
• Enhancing returns: Exploring new opportunities: Think about ways to enhance your portfolio returns through strategic investments. Look for tools and instruments that offer flexibility in adjusting exposure and capturing potential upside while managing downside risk.
• Leveraging market conditions: Tactical moves: Utilize market reactions post-earnings to make tactical moves in your portfolio. Whether it’s rebalancing, diversifying, or strategically positioning your investments, there are sophisticated methods to optimize your portfolio’s performance.

Tips for Post-Earnings Period

Maintain rational decision-making

• Avoid emotional reactions: Post-earnings periods can be volatile. Ensure your investment decisions are driven by thorough analysis rather than short-term emotional responses.

Conduct a post-earnings review

• Evaluate performance: Compare the latest earnings report with your expectations and the market consensus. Identify key drivers of any deviations.
• Update your investment thesis: Use the new data to reassess your investment strategy. Adjust your valuation and forecast models as necessary.

Leverage market opportunities

• Identify trends: Look for emerging trends or shifts in the market sentiment post-earnings that could impact Nvidia's future performance.
• Adjust positions: Consider rebalancing your portfolio to optimize risk and return based on the latest financial insights.