Is it time to invest in Nvidia stock after solid Q3 results?

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Updated on Sep 26, 2024

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Nvidia shares on Thursday rallied 8% after announcing its most recent quarterly results.
The company reported its FQ3 results Wednesday after markets closed, beating analyst expectations.
NVDA reported record data centre and gaming revenues, respectively increasing by 55% and 42% Y/Y.

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On Thursday, Nvidia Corp (NASDAQ:NVDA) shares rocketed nearly 8% after releasing its most recent quarterly results. The company announced its fiscal third-quarter revenue and earnings Wednesday after markets closed, surpassing the average for analyst expectations. Nvidia’s data centre and gaming revenue contributed to the solid quarterly performance.

The company posted FQ3 non-GAAP earnings per share of $1.17, beating the average for analyst expectations of $1.08. In addition, its GAAP EPS of $0.97 surpassed the consensus Street estimate of $0.86, while revenue for the quarter increased by more than 50% to $7.1 billion, exceeding expectations by $290 million.

Nvidia data centre revenue grew by 55% to a record 2.94 billion, while gaming revenue also set a new quarterly high of $3.22 billion after increasing by 42% Y/Y.

Should you bet on Nvidia’s growth?

From an investment perspective, Nvidia shares trade at steep trailing 12-month and forward P/E ratios of 112.85 and 67.34, respectively. Therefore, value investors could opt for alternatives in the market.

On the other hand, analysts are optimistic about the company’s growth prospects, forecasting an EPS growth of more than 52% this year. They also expect its bottom line to grow at an average annual rate of 32.60% over the next five years.

As a result, the stock could gain the attention of long-term growth investors.

Technically, Nvidia shares seem to have recently spiked to complete an upward breakout from a descending channel formation. However, the stock pulled back in the afternoon session after surging to the overbought conditions of the 14-hour RSI.

Therefore, investors could target extended pullbacks at about $294.09, or lower at $271.80, while $335.94 and $355.48 are crucial resistance zones.

It could be time to take some profits

In summary, although Nvidia offers exciting growth prospects, the stock has spiked recently to trade at steep valuation multiples, making it less attractive to short-term investors.

Therefore, with shares still closer to overbought conditions, it could be time for profit-takers to swoop in.