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Why Nvidia Stock Jumped 15% in August | The Motley Fool

What happened

Nvidia (NASDAQ:NVDA) stock popped 14.8% in August, significantly outpacing the S&P 500‘s 3% return, according to data from S&P Global Market Intelligence

This robust performance can be attributed to the graphics chip specialist’s release of strong second-quarter results and continued investor enthusiasm about its long-term growth potential. 

Nvidia stock is having a great year. In 2021 to date (Sept. 3), the tech stock has returned 75.1%, compared to the broader market’s 22% return. 

Image source: Getty Images.

So what

On Aug. 18, Nvidia released fiscal second-quarter results that beat Wall Street’s consensus estimates for revenue and earnings, and issued fiscal third-quarter guidance for the top and bottom lines that also came in higher than analysts had been expecting.

Shares popped 15.3% in the three days following the release, while the broader market was up 1.8% during this period. Shares continued to move upward throughout the rest of the month.

In its fiscal second quarter, Nvidia’s revenue surged 68% year over year to $6.51 billion, topping its guidance of $6.30 billion and the analyst consensus estimate of $6.33 billion. All four platforms posted at least double-digit year-over-year growth, with the two largest platforms, gaming and data center, growing revenue by 85% and 35%, respectively.  

Nvidia’s results also got a boost from sales of its cryptocurrency mining processor, launched earlier this year. CMP sales were $266 million, or about 4.1% of the company’s total quarterly revenue.

Adjusted for one-time items, earnings per share (EPS) soared 89% to $1.04, surpassing the $1.02 the Street had been expecting.

NVDA Total Return Price Chart

Data by YCharts.

Now what

For fiscal Q3, management projects revenue of $6.80 billion, representing growth of 44% year over year. It also guided (albeit indirectly, by providing a bunch of inputs) for adjusted EPS of $1.10, or growth of 51%.

I’ll reiterate what I said in my earnings article: Nvidia stock is one of the best growth stocks in the market today, in my view.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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