Key Takeaways
- Nvidia delivered Q1 earnings of $1.87 per share, surpassing analyst expectations of $1.76, while revenue reached $81.62 billion — representing an 85.2% year-over-year increase.
- Shares declined 1.8% following the earnings announcement, trading near $219–$220 during Friday’s premarket session despite beating expectations.
- The company’s forward price-to-earnings ratio has compressed to approximately 22x, significantly below AMD’s 47x and Intel’s 95x multiples.
- Management unveiled an $80 billion stock repurchase authorization and increased the quarterly dividend from $0.01 to $0.25 per share.
- Wall Street remains overwhelmingly bullish with 93% of analysts maintaining Buy ratings and consensus price targets ranging from $294 to $298.
On Wednesday, May 20th, Nvidia delivered what many would consider exceptional quarterly results — yet the market’s response was surprisingly tepid.
The chipmaking giant reported earnings of $1.87 per share, easily topping the Street’s estimate of $1.76. Quarterly revenue came in at $81.62 billion, exceeding the $78.42 billion consensus forecast. This represented a remarkable 85.2% jump versus the prior-year period.
Yet shares retreated 1.8% in trading following the announcement. Heading into Friday’s premarket session, the stock was hovering between $219.51 and $220.08 — marking a decline from earlier in the week.
This subdued market reaction has caught the attention of market watchers. Benchmark Research’s Cody Acree boosted his price objective to $335 from $250, while offering a candid assessment: the investment community has grown so accustomed to Nvidia’s excellence that even exceptional results fail to generate excitement.
“Investors have simply become increasingly complacent in their expectations of Nvidia’s outsized execution, making almost any degree of outperformance look like normal course business rather than a catalyst for a positive re-rating,” Acree noted.
There is a potential upside, though. The recent decline has made the stock more attractively valued.
Compelling Valuation Emerges Following Price Decline
The recent weakness has pushed Nvidia’s forward P/E multiple down to slightly above 22x based on FactSet data. This represents a significant discount compared to AMD, which trades at nearly 47x, and Intel, which commands a multiple exceeding 95x.
Barron’s previously highlighted Nvidia as undervalued around $226 with a 26x forward P/E. At today’s prices, that investment thesis becomes even more compelling.
Shareholder returns are also getting prioritized. The company authorized a massive $80 billion buyback program — representing roughly 1.5% of shares outstanding — while simultaneously boosting its quarterly dividend twenty-five-fold from $0.01 to $0.25 per share. Shareholders of record on June 4th will receive the payment on June 26th.
The company’s fundamentals remain exceptional, with return on equity at 110.48% and net profit margins of 62.97%, per recent filings.
Analyst Community Maintains Conviction
The Street’s outlook remains decidedly optimistic. A commanding 93% of analysts tracking the stock maintain Buy-equivalent recommendations. Consensus price targets cluster around the $294–$298 range, implying substantial upside from current levels.
Raymond James reaffirmed its Strong Buy stance with a $330 objective. Both Wolfe Research and TD Cowen established $275 targets. Seaport Research Partners stood as the exception, maintaining a Sell rating despite lifting its target.
Institutional activity continues to trend positive. Torren Management LLC established a fresh position valued at approximately $1.86 million during Q4. M&T Bank Corp expanded its holdings by 8.6%, bringing its position to more than 3.6 million shares. Eagle Wealth Advisors initiated a $13 million stake.
The stock has traded between $129.16 and $236.54 over the past 52 weeks, with its 200-day moving average currently at $188.87.
Nvidia’s market capitalization stands at $5.32 trillion.
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