Nvidia Projection - Why did NVDA Stock Drop?

Why Did Nvidia Stock Go Down Nvidia reported a massive 122% Revenue growth on surging demand for its data center chips and yet the stock was down 8% after hours Nvidia reported earnings after the Bell that beat Wall Street's expectations and provided stronger than expected guidance for the current quarter so why did it fall 8% after hours now the good news is Nvidia stock is already started to recover it recovered quite a bit of those losses on Thursday and I do believe the future outlook for NVIDIA is quite good I'm going to give you my prediction in this video of where I see Nvidia stock going in the future first I want to break you down what happened with nvidia's earnings and really dig into their forward guidance to kind of understand what we can expect for nvidia's stock over the next few months for those of you who are new to this channel my name is stock Curry I'm a former maril lnch Morgan Stanley investment banker and I have over 25 years of trading experience nvidia's earnings per share came in at 68 cents adjusted versus 64 cents expected Revenue came in at 30 billion versus 28 billion expected beating both revenue and profit expectations Revenue continues to Surge at the chipmaker rising 122% on an annual basis during the quarter but here's where we start to run into problem s that follows three straight periods of year-over-year growth in excess of 200% so while 122% is amazing it is significantly less than the 200% Nvidia was seeing but there are good reasons why nvidia's stock did not drop further and that is because their profits were outstanding net income more than doubled to 16.6 billion in the quarter from 6.18 Bill in the year ago period so even though Revenue growth slowed down their profits were incredible now this was due in large part to the gross margins which are quite high but there is another reason why the stock fell after earnings and it has to do with gross margins Nvidia said its gross margin slipped in the quarter to 75.1% from 78.4% in the prior per period although it's still up from 70% a year ago there's another reason why Nvidia stock fell after earnings and that had to do with their forward guidance nvidia's sale forecast failed to meet the lofty expectations of investors in short investors were pricing in blowout earnings and while nvidia's earnings were better than expected they weren't quite the blowout earnings that the stock was pricing in in videoid forward PE ratio right now is at 47.3 n that is the highest the forward PE ratio has been in over a year investors were pricing in extremely good earnings as good as they had been over a year ago and Nvidia just could not quite meet those high expectations that said Will Nvidia Stock Go Up even though this past quarter was not as good as investors had hoped there is hope for a major turnaround and a Rec y in the future when it comes to forward Guidance the stock fell a little bit because third quarter revenue is going to be about 32.5 billion and while that is higher than the 31.9 billion average that analysts had predicted estimates had ranged as high as 37.9 billion again 32.5 billion was better than expected but not nearly as good as the lofty expectations that the stock price was pricing in that said once we get to Q4 the company signaled that it was working through production snags with its highly anticipated new Blackwell chip which did weigh on nvidia's stock in late trading but as you're about to see here in a minute is actually a good thing now before I get Will Nvidia Stock Go Down into the reasons why Nvidia stock could Skyrocket in 2025 we first have to go over the risks because no investment is without risk most of nvidia's growth comes from a small group of customers about 40% of nvidia's Revenue stems from large data center operations like alphabet inks Google and meta platforms although meta and others have increased their capital expenditure budgets this earnings season there is concern that the amount of infrastructure being put into place exceeds current requirements and that could lead to a bubble in short the risk to Nvidia stock is that the 40% of customers that are buying all of this infrastructure might be near the end of their buying cycle and that could potentially cause a significant Revenue drop for NVIDIA in Q4 and beyond that is the risk to the stock that you have to be concerned about but if that risk ends up not playing out then the future outlook for NVIDIA is quite good that said in the Nvidia Prediction Short Term short term at least for the next 3 months we are going to have some issues that we've got to deal with while nvidia's operating margin was very high it narrowed from the previous quarter that said nvidia's adjusted gross margins should stay in the 75% range for the rest of the year 75% gross margin is massive and so long as Nvidia can can maintain that 75% gross margin and they can see their revenues increase then we should also see profits increase by the same amount that revenues increase will Nvidia actually be able to increase revenues the concern is that the pace of nvidia's sequential sales growth has been slowing for four quarters nvidia's $ billion in revenue for the second quarter from fiscal year 2024 was up1 2% from the year ago quarter but it was only up 15.3% from the fiscal year first quarter Revenue growth is slowing down and continues to slow down which is the major concern for nvidia's stock valuation in 2023 Revenue growth was 200% in 2024 it was 122% but if Nvidia continues to grow revenues at 15% per quarter then in 2025 remedy growth is only going to be 75% so slowing Revenue growth is the biggest concern for investors at the current time but if that slowing Revenue growth was in fact expected to continue we would have seen a video stock fall much further the good news is that Revenue growth is expected to turn around in Q4 and Skyrocket in 2025 now even though Revenue growth is expected to turn around there was also concern about gross margin slowing down but I do believe those concerns are unfounded since two years ago nvidia's gross margins are around 45 to 65% and now they're all the way up to 75% now there is another reason why Nvidia Prediction Long Term Nvidia stock is expected to increase in price starting in Q4 and Beyond and that is the fact that Nvidia is delivering a big boost to its buyback program the company is increasing its share repurchase authorization by $50 billion and it still had 7.5 billion remaining on a prior authorization as of the end of the second quarter Nvidia spent 7.2 billion do in stock Buybacks in Q2 which was more than double a year ago and that stock buy back is expected increase over the next few quarters the fact that nvidia's not only buying back stock but buying back stock at an ever increasing pace is a very good thing and it should help increase the price of Nvidia since instead of getting share dilution from a share offering you're actually getting an increase in shareholder value from these stock BuyBacks so even if everything stayed the same for NVIDIA the stock BuyBacks alone should increase the price of a nvidia's stock now we do have some issues that we have to get through for Q3 with a slow down in revenue and a slow down in Gross margins but all of that is expected to turn around in Q4 Nvidia gave some clues about the fourth quarter given demand expectations Nvidia has visibility into a quote unquote growth opportunity in the fourth quarter the company will also have early shipments of its new Blackwell chip by then what is the this growth opportunity for Q4 well Nvidia didn't say but if I had a guess I would say their next Generation chip after Blackwell is probably going to start sales and if it does that could be a major Revenue boost for NVIDIA and Q4 so this is good news for Q4 even though it's a little bit of bad news for Q3 in a minute I'm going to explain where I see Nvidia stock going for first I want to touch upon the new Blackwell chips briefly because one of the reasons why nvidia's stock has been struggling recently is due to some production hiccups with the new Blackwell chip Nvidia said it changed its Blackwell mask in order to improve production yields that means the Blackwell production ramp is scheduled to begin in the fourth quarter and continue throughout fiscal year 2026 Nvidia expects to ship several billion in Blackwell Revenue in the fiscal fourth quarter Nvidia would see a lot of Blackwell Revenue this fiscal year but even better Crest also said in her remarks that the current demand for its current generation Hopper chip is strong and shipments are expected to increase in the second half of fiscal 2025 that means not only is nvidia's revenue expected to get a major boost in Q4 but that re Vue is expected increase even further throughout all of 2025 and if Nvidia can maintain the 75% gross profit margins which I do believe those gross profit margins are actually going to increase once they start selling their next Generation chip possibly as early as Q4 then Nvidia stock should turn around and start to Rally once again so what is my price prediction for Nvidia stock where do I see the stock going in the future well let me start out by saying this Q3 for the next three months might be a little bit of a hiccup investors might not be able to look past the fact that Revenue growth is slowing down that gross margins have slowed down and we might see a little bit of a sell-off in the stock over the next three months but after that in Q4 comes in and we start getting those Q4 forecast we start seeing Revenue pick back up I do believe that in Nvidia stock is going to turn around and start to Rally once again hitting brand new alltime highs possibly in Q4 but in my mind there's a very good chance we'll hit those new all-time highs by 2025 and then continue to rise from there so if we do in fact see a dip in nvidia's stock price over the next 3 months I personally believe this would be a great buy the dip opportunity and anticipation of Nvidia stock rallying starting in Q4 and throughout all of 20 25 now before I go I do want to share some exciting news about something I've never done before on Saturday September Free Class 7th I am hosting a live master class this is the first time I've ever done this it might be the only time I ever do this in the live Master Class I'm going to be teaching you what I learned at maril Lynch and Morgan Stanley as far as how professional Traders make money in the stock market more importantly how they keep that money and don't lose it what I have seen over the past couple of years being on YouTube is that a lot of retail Traders actually gamble in the market without even realizing it so what I want to do is take some time on Saturday September 7th that's next Saturday to go through and give you a live masterclass training to teach you how Wall Street professionals trade I want to show you the Wall Street way I want to show you the proper way to trade and make money in the stock market and how these people make billions and trillions of dollars every single year While most retail investors struggle if you want to sign up for that live Master Class you do have to register for it there is a link to register down in the description of this video it'll be the first link in the description and I hope to see you guys there it's going to be live so you have a chance to ask me questions as we're going through the class and I'll be able to touch on some things that maybe I didn't even think of that you might be struggling with so Saturday September 7th make sure you register for that you'd have to be registered to join and again the link for that is the first link in the description below