•Stock Trading the Manner of same levels since its January earnings event. it initially returns to these levels after a 35 percent Drawdown, which took almost three months to recover.
Which have become the pattern of the past few earnings events.
The February Earnings Event came with a big one - an 11% decline.
Nvidia data center revenue has been telling a very clear story. There's a supply issue. The Growth in data center revenue has been on a Rhythm of about $4Billion a quarter since the second half of 2023. And this means the Trajectory Nvidia's Revenue Growth Rate continues to be down.
However, the backlog of demand for Nvidia's most advanced chips is only getting bigger and bigger. Remember, just a few weeks ago the Trump administration was said to be considering allowing Nvidia to sell a million chips to the UAE. That would be a $30 billion deal.
For context, Nvidia probably did $40 billion in data center revenue last quarter. And the American tech giants are already lined up with hundreds of billions of dollars committed to buy as many chips as Nvidia can supply them.
Halting and Reversing Nvidia's declining Growth rate depends entirely on bringing new Global manufacturing capacity online. It's underway -- in the U.S. It Was initially asked when will it come online?;It sounds like mid-next year, at the earliest.
Until then, the path for Nvidia trend revenue growth would fall below 50% (chart below). But with 56% net income margins, the stock would get cheaper and cheaper along the way. The forward PE (on an annual revenue run rate) would be in the mid-20s by mid-next year on the current $3.3 trillion valuation.
The growth in data center revenue has been on a rhythm of about $4 billion a quarter since the second half of 2023.
For Q1, data center revenue grew by $3.5 billion. That's the weakest quarterly growth since Jensen Huang declared the technology revolution was underway two years ago in his May earnings call.
This is the lowest quarterly growth in data center despite what is broadly known to be insatiable demand for Nvidia's GPUs.
Also, margins came in dramatically lower. Gross margins fell from 73% to 61%. And net income margin fell from the mid-50s (percent) to 43%.
And (directly related to that margin hit) they spent a lot of time on the call talking about billions of dollars of charge-offs due to restrictions on chip trade with China.
Over the past several quarters, the Nvidia's supplier, Taiwan Semiconductor, seems to have hit capacity. And it seems clear that Nvidia can't chip away at the backlog of demand until new global capacity comes online (which will be in the U.S., next year).
But, the data center revenue growth in Q1 was fueled by networking equipment and inferencing. Both had explosive growth in the quarter, and it's expected to continue.
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