Send me real-time posts from this site at my email

Why NVIDIA Stock Soared 22% in May

What happened

NVIDIA (NASDAQ: NVDA) stock jumped 21.5% in May, according to data from S&P Global Market Intelligence. For context, the S&P 500 returned 4.8% last month.

Shares of the artificial intelligence (AI) leader have started June on a slow note, however, gaining just 0.4% this week. Meanwhile, the broader market was up nearly 5% for the week.

Image source: Getty Images.

So what

We can attribute NVIDIA stock's strong performance last month largely to investor optimism that the company's results for fiscal first quarter 2021 would be strong.

NVIDIA didn't disappoint. On May 21, it reported that its first quarter revenue rose 39% year over year to $3.08 billion. Growth was driven by its AI-driven data center platform, whose revenue rocketed 80%. Adjusted for one-time items, earnings per share (EPS) soared 105% year over year.

Results on both the top and bottom lines easily beat Wall Street's consensus estimates. Analysts were looking for adjusted EPS of $1.68 on revenue of $2.98 billion.

Now what

NVIDIA's outlook was robust. For the second quarter, management guided for revenue of $3.65 billion, representing growth of 41.5% year over year. It also expects adjusted EPS of $1.94, according to my calculations using the various inputs that management provides. This represents growth of 56.5% year over year.

Guidance includes the contribution from Mellanox Technologies. NVIDIA closed on its acquisition of the high-performance networking specialist on the first day of its fiscal second quarter.

Mellanox is expected to contribute a "low-teens percentage" of NVIDIA's total second quarter revenue and be immediately accretive to its earnings.

Find out why NVIDIA is one of the 10 best stocks to buy now

Motley Fool co-founders Tom and David Gardner have spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

Tom and David just revealed their ten top stock picks for investors to buy right now. NVIDIA is on the list -- but there are nine others you may be overlooking.

Click here to get access to the full list!

*Stock Advisor returns as of June 2, 2020

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue