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Why Nvidia Stock Bounced Back Today

What happened

Shares of graphics semiconductor supplier Nvidia (NASDAQ: NVDA) recovered from their mini sell-off Tuesday, regaining 2% in Wednesday trading as of 12:25 p.m. ET.

Image source: Getty Images.

So what

In twin earnings reports last night, Dell Technologies (NYSE: DELL) and HP (NYSE: HPQ), two of the biggest names in personal computing, reported sizable earnings beats that confirmed the health of personal computer demand. And that at least implies further strong demand for Nvidia's chips.

Dell reported adjusted earnings of $2.37 per share for its fiscal third quarter, well ahead of consensus predictions for $2.18, and similarly strong outperformance on sales. HP outperformed similarly, reporting a $0.94 per share profit when Wall Street had only expected $0.88, and HP announced better than expected sales as well.

Now what

Dell's co-chief operating officer, Chuck Whitten, noted that the company is already "three quarters into what will prove to be a historic year," and chief financial officer Tom Sweet expressed optimism about the company's long-term prospects.

TheFly.com noted yesterday that HP chief executive officer Enrique Lores went so far as to predict that the PC business will continue "strong for the foreseeable future."

What's good for companies that build Nvidia chips into their PCs will logically be good for the maker of those chips as well. For investors who are betting that Nvidia can live up to analyst forecasts for 25% long-term earnings growth over the next five years, this is exactly what they wanted to hear.

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Rich Smith 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.


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