There’s a trade I look forward to four times a year.
Not some exotic option play. Not a penny stock punt.
Just Nvidia posting quarterly earnings.
Why?
Because for the past year, the pattern has been as reliable as gravity…
Nvidia releases exceptional numbers, smashing Wall Street’s lofty expectations. Revenue grows. Profits grow. AI data centre dominance continues to pump. Forward looking estimates are revised higher. The AI revolution keeps feeding them better and better numbers quarter on quarter, year on year…
And then…
The stock drops. Every. Single. Time.
A few days or a week or so later, the market figures out this is a beast of a company, realises it (or at least the algorithms) overreacted, and Nvidia climbs back up to new highs.
Like clockwork, that post-earnings dip has been a gift for anyone brave enough to buy it.
The logic behind it I find comical.
And you see it with every earnings. Investors convince themselves that at some point Nvidia’s growth must slow down.
Surely this pace can’t last forever, right? So, every time they smash earnings, traders sell the news. And every time, the “inevitable slowdown” never arrives.
Every quarter isn’t a quarter closer to a slowdown. Every quarter is another quarter of acceleration and one that further cements the high-tech future that sits on our doorstep.
Another monster quarter
Look at their most recent results.
Nvidia hauled in revenue that still looks like a hyper-growth start-up, not a $4.2 trillion company. The datacentre division, their crown jewel, saw revenue jump 56% from a year ago. Every line of their earnings grew double-digits year on year.
And this is with zero H20 chips sales to China.
Forward estimates are even bigger with $54 billion in revenues, still with no H20 sales to China.
They even noted Disney, Foxconn, Hitachi, Hyundai, Lilly, SAP and TSMC as first adopters of their Blackwell servers.
Mega multi-billion-dollar companies are all buying in, getting set in the ecosystem, forever having to upgrade and improve and buy, and rollout their own AI.
Here’s the part most people miss.
Nvidia is being priced like a mature tech staple… while soaring like a rocket.
Its forward P/E sits around 39x. Compare that with Tesla at 178x, Palantir at 243x, or even AMD at 41x. Microsoft trades at 32x, Amazon at 34x. If you want big growth, I’d say Nvidia’s going to get it more than MSFT or AMZN.
So Nvidia, the company building the picks and shovels of the AI revolution, is being valued only a little higher than “slow and steady” Microsoft, and less than half the multiple of Tesla.
That doesn’t scream bubble. If anything, it looks cheap.
Why does the market keep doubting?
I don’t get why the market keeps doubting Nvidia at every earnings release. I mean this is a company that for decades has been at the heart of technological progression.
I know our Publisher Kris might have mentioned this once or twice before, but he and I published an Nvidia stock recommendation back in December 2013.
Even back then with Nvidia carrying a market capitalisation of $9.1 billion and a (split adjusted) share price I think about 35 cents, we said,
“When the Digital World and Real World Merge Your car drives itself…”
“You can be omnipresent anywhere in the world…”
“Robots around the home assist in everything from cooking to fixing injuries…”
“…as the world expects more complex interaction with everything, more responsibility falls onto the shoulders of the GPU.”
“Computers and networks will need to be faster and will need to process more information than ever before… And it might even be a key part of machine learning and artificial intelligence…”
“…the reason this will all be possible is because of the ability of GPU’s to handle it all. Whether it’s simply at home, in the office or on the move, NVIDIA GPU’s are and will be in all aspects of life as technology evolves.”
It is as clear to me now as it was back then that Nvidia will be in all aspects of life as technology evolves.
But the market still can’t seem to get its head around these technological eventualities…
We’re talking self-driving cars that no longer need human intervention, humanoid robots in factories and in the home, autonomous logistics networks where robots unload ships onto self-driving trucks that deploy to warehouses where the humanoid robots unpack, sort and distribute goods, drones managing agriculture, medical devices that diagnose on the fly.
All of it, and I do mean all of it, will run on Nvidia technology and their platforms.
Jensen Huang has called humanoid robots alone a “multi-trillion-dollar opportunity.” Add in autonomous transportation, defence, industrial automation, healthcare, and consumer devices, and the scale is staggering.
Nvidia doesn’t just sell GPUs or AI chips anymore.
It sells AI infrastructure.
Of course, I can’t promise that every earnings release from here on will give the same pattern and presents a buying opportunity.
And of course, Nvidia is unlikely to deliver a 49,614% rise in the next 12 years like it has since December 2013.
But I can tell you this… Nvidia earnings season is when I enjoy the market panics.
The pattern has been consistent; the sell-the-news dip is a buy-the-future moment.
At 39x forward earnings, with growth that still embarrasses the rest of the S&P 500, and with exposure to the single biggest industrial expansion of the next decade, Nvidia doesn’t look overpriced.
If anything, it looks like the market still doesn’t get it.
The “inevitable slowdown” hasn’t come. And I don’t think it does… ever.
Until next time,
Sam Volkering
Contributing Editor, Investor’s Daily
P.S. If Nvidia’s earnings pattern feels like a cheat code, wait until you see what could happen on September 17. One obscure $38 investment — what we’re calling the AI Master Key — could spike as the next wave of AI demand kicks off. It’s not Nvidia, but it could benefit from every AI stock that booms. See how it works here.
