Nvidia's Earnings and Stock Buyback

The highly anticipated release of Nvidia's earning occured this week. The company reported a second quarter revenue of over $30 billion. This translates to a year-over-year increase of 122%, beating expectations. But it wasn't enough to cause a rally in the stock price, instead we saw a drop of about 7% in the initial after-hours.  Sometimes this happens when traders are digesting the information and planning their next move. Another big announcement was made by the firm, a $50 billion stock buyback.  Stock buybacks can lead to an increase in the stock price as there are less shares in the market when this is complete, supply and demand. 

The financials of Nvidia look good, the outlook is still positive and there are plenty of new opportunities on the horizon for Nvidia's CEO Jensen Huang and firm. The over AI market has seen a huge increase this year and the question is, is there more upside or has this trade already seen its peak this year? My opinion is no, Nvidia is constantly looking for new opportunities in the market and we consistently see this in their earnings releases and press conferences.

The real question lies in the outside markets, investors appetite and what the Fed's next moves are in September. I'm anticipating this stock to test $140 in the coming month. $130 has shown to be some solid resistance and the stock tends to struggle to trade above that price but with a Fed cut and an upcoming election, we should see some volatility in the new month.

Disclaimer: Past performance is not indicative of future returns. Opinions are my own. Profitable trades are not guaranteed.

 

On the date of publication, Peter Mooses had a position in: NVDA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.