Why Nvidia Stock Tanked After Earnings!

hi stock investors JJ here welcome back well Nvidia earnings are out and the stock went down let's have a look and then I'll react to some of the clips about earnings this as a reaction Channel after all we can see here that the stock's down 6.89% after hours after being just over 2% down during the day so what happened we're expectations too just too high for NVIDIA it's a possibility look at this slide here for video we can see that it did not do too badly at all we can look at the data center gaming professional visualization Auto and demem and other we can see that the numbers were all up they weren't down the numbers look good there on the face of it so what went wrong let's catch up with the news and see what happened see what they're saying and I'll react to it along the way we'll try and get a sense of why it did not meet the market expectations this time around they've been climbing up quarter by quarter it has to be said so let's see what does it look like John second quarter earnings are in for NVIDIA 68 cents adjusted versus the estimate of 64 cents so a beat on its bottom line revenue at 3.04 billion also higher than Wall Street consensus of 28.7 billion we have comments here from CEO Jensen Wong in the press release Hopper demand remains strong and the anticipation for Blackwell is incredible he says Nvidia achieved record revenues at as global data centers are in Full Throttle to modernize the entire Computing stack he goes on to say that Blackwell samples are shipping into shipping to our partners and customers Spectrum X ethernet for AI and Nvidia AI enterprise software are two new product categories achieving significant scale okay so it has to be said that the CEO Jensen he a very good salesman and there's marketing involved in this so you need to dig deeper and see what's going on one thing that I noticed where margins was slipping a bit the market would not like that and they talked about Blackwell there how there was a delay the market we knew kind of that was going to happen and he did say that it was going fine in that marketing statement but people were looking for the earnings call and some of the comments there the market didn't like they are also doing a buyback of $50 billion or authorized buyback I would say though that you know would they do that with the with the share price going up so much what's that about if you were Warren Buffett you would only buy back if the when the share price was low when there was a might have be a temporary problem or the market didn't like it are they waiting that for they expecting that or is it just to pump the share price in terms of or we think the share price is slow and we buy back anyway let's get more into it another data point here Nvidia announcing a $50 billion repurchase of shares we are watching the stock here uh move fractionally higher in overtime John we'll get you the guidance in just a second uh all right we'll await that guide looks like it's a little bit above a little bit above expectations Nicole what do you do with it here if you feel like you missed the big move the earning speeds are narrowing I think that's exactly what I was watching over your shoulder as the market was trying to digest in the moment the earning speeds are narrowing and as I said the market expectations have been so high for NVIDIA how can a company Beat expectations I'm not talking about earnings expectations the market expectations there's a lot of eyes on that a lot of investors including retail investors on this expecting this to go higher and higher to beat the expectations to keep going when the earnings beats are narrowing the the street is less impressed on where we're headed next and so I think until there's more clarity around movement outside of the hyperscalers obviously adoption from Finance from Health Care from the consumers like we started to hear from Walmart that's the next leg and so I think the more we learn about Blackwell what the is going to do the demand for the stack and these higher even higher margin products right this next gen next wave even higher margin so that margins are so high with this company can they only go down they have slipped a little bit in and as she said Wall Street wouldn't have liked that that's I mean they did beat expectations slightly but there were things there this you know when will it end this has been a cyclical industry will it be a time when it just doesn't beat expectations of some of the some of the customer stop buying because the AI buildout is just slowed down just a fraction will that be something to sh send the share price down to to dampen expectations that's what moves us higher and so I wouldn't say this isn't an entry point because we believe that we are long Nvidia for 18 plus months here along 18 plus months more she thinks those lines Paul the fact that you had Revenue up 152% year-over-year but perhaps more significantly or Revenue up 122% year over year um which represents another quarter of more than doubling I mean it would it tripled in the last quarter so it does represent a deceleration in that rate of growth and I wonder how much that is factoring into the stock as you see these rapid moves on your screen right now but we're we're current I think that's a factor I think she's hit the nail on the head there that you know just even even slightly down from expectations is because the price has gone up we have to remember it's gone up around 1,000% since October 2022 it's had a rapid rise there if we look at that I mean it's been an incredible rise there since since that time there about there look at that over 1,000% in less than two years we just can't forget that sort of action currently down 4% yes so I mean I think you know we talked about you know earlier before it released they were going to have to exceed 30 billion just to you know keep the market uh somewhat level here but to your point they've been increasing revenues so high revenues have more than uh quadrupled U over the last three years that's not going to happen again over the next three years just you know just you'd have to have revenues of over 500 billion a year in order to keep that pace going so the pace is going to slow and so we we we always hear about oh it's trading at a cheaper valuation now than it was a year ago but the growth was so much stronger over the last the last year that pace of growth is going to slow I'm not saying that Nvidia is a stock that you don't want to own but you have to reset your expectations here that what we've seen in the growth is going to slow down going forward and you know I think there's other places that where investors can look in the market outside of just these mag seven type stocks and you want to look for a broadening of the rally to areas that you know we're not talking about every day that 75 analysts aren't covering and that the Wall Street Journal in Bloomberg okay we get it so he's saying it's going to broaden out not necessarily go down looking for other stocks in the in the market I mean I agree with that I'm not looking at Nvidia at the moment it's not investment advice so you got to do your own work not investment advice at all but if you're getting value out of this episode so far do remember to smash that like button to help the algorithm to spread it to more people and subscribe relatively new channel here if you want to get more of this kind of content we're going to see another discussion an interesting discussion now as well as gets more into the into the depth of it is it that it's not meeting expectations well he said had to be reset the expectations had to be reset and it wouldn't take much because the expectations as I keep saying have been so so high although some people don't think so that this can keep on going and doubling and doubling and doubling their revenue because the AI buildout is so big it's going to be so big I think they did really good as per our expectations I'm sure the Nvidia obsesses and might be disappointed given the magnitude of the beat which we had called out to be in the single digit uh range um and especially against the lofty unsustainable expectations that uh some of the again Nvidia obses have been forming but fundamentally in terms of longterm in terms of the competitive landscape everything remains intact we don't see any big risks out of this earning so far nobody nobody disputes that it's a great company with great earnings incredible earnings incredible margins everything's going well sort of but is it price to Perfection that's the question you see any um softness when it comes to the Outlook even though it did it exceeded some expectations it didn't exceed the loftiest expectations are you seeing signs of softness with its comp with its uh customers I wouldn't call it a softness in terms of demand I would rather call it more of a timing I mean um in the given last 30 days we have come to know about the blackw delays right but as we had called out in our preview there's enough demand for the hopper series um and the supply for that has come along so they have the ability so there was a delay there and it was flagged before earning so that should have dampened expectations a little bit I guess it did and the CEO Jensen he was talking about that is sort of giving marketing speak but I think between the lines there definitely is going to be a delay he talked about billions is they still going to make billions in coming going forward without any specifics they of course they're going to make billions they do make billions on everything at such a big scale so they're very like indeterminant to ship more and more to this demand which kept them intact and the the guidance still came to a beat of course I think you know the delay might actually push out the magnitude of beat which we would have expected into 25 calendar 25 which might actually drive increase to the upside of 25 numbers as we get more details on it help contextualize this for us Nvidia expects to ship several billion dollars of Blackwell Revenue in the fourth quarter of the year I feel like Carol I'm parsing a Fed statement here what kind of vague what is several very it is vague it's very vague several billions mean koun John is that a lot or is that disappointing to investors I wouldn't call it completely disappointing again given what we came to know over the last four weeks um when we you have to you have to say that he's got a vested interest in being positive about it here not completely objective working on the preview two weeks ago we thought it will be very little volume so this several billion actually is good in a way and comforting that okay there will be some shipment and it's not completely delayed until the first Q fiscal quarter so I I wouldn't call it completely disappointing so we are watching um big Tech falling after Nvidia uh their results as I mentioned the NASDAQ 100 e mini Futures in the aftermarket down 1.6% % uh it's you know I'm looking at the QQQ uh that also we see it down yep the the other tech stocks or that big Tech Bing is that going to continue there was there was fear that this could break the market if if if the earnings didn't go so well as we've seen inidia Down will it rebound tomorrow will it keep going Will the Market just get over this reset expectations but keep it going up there remains to be seen what do you think is going to happen you invested in Nvidia do you have it in your portfolio and speaking of portfolios I have a special offer for my viewers here from sharite which is a portfolio tracking and Reporting toour which I use myself along with 400,000 investors that trust it worldwide you can bring your trades into there in historical trades as well you can bring the new trades automatically in and get historical trades from your Brokers to see the True Performance of your portfolio do you know the True Performance of your portfolio including 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