NVIDIA Corporation (NASDAQ: NVDA )'s earnings report saw a rather mixed reaction to the stock. While the shares surged in premarket trading the day after, on Friday, they closed 4.6% lower. With Cramer being one of the firm's biggest supporters, he invited the firm's CEO for an interview on Mad Money. After the interview, the CNBC TV host remarked that Huang had told him that the firm's chips had software that was upgradable. In his morning appearance on the 28th, Cramer explained what made the shares rise in after market trading after being initially weak:
"Matt Murphy got the kind of, yeah it was a tough moment for him I think, some degree, the CEO of Marvell. But he's very common regular guy and suddenly the next trillion dollars, and it's from Jensen, and Jensen's got more gravitas than anybody. I don't know, look I look at what happened in that conference call, where the company reports, alright, and it's just a flat out report, and doesn't give you the Collette Kress guide up of 70% and people are just. . .slamming it [NVDA] down. And then at the third sentence in the actual conference call, she talks about the much, much radically better revenue growth and then you get the stock up to 519, I mean 219. Now here's the problem with this thing. This stock didn't get to the top so there's going to be somebody David who says you know, 219, 228, 232, didn't take out the top, so therefore you know David, what they're going to be saying. Double top.
NVIDIA Corporation (NASDAQ:NVDA) reported its fiscal Q2 earnings on August 26th and posted $96 billion in revenue and $2.46 in earnings per share to beat analyst estimates. Crucially, the firm's data center revenue surged by a strong 117% annually to sit at $89 billion. Perhaps even more importantly, NVIDIA Corporation (NASDAQ:NVDA)'s AI Clouds, Industrial and Enterprise (ACIE) segment marked 138% annual growth to sit at $40.3 billion. This growth suggested that the firm's business was not solely dependent on hyperscaler orders and was diversifying. As if this weren't enough, Kress guided 70% growth for the full fiscal year, which was ahead of analyst estimates.
Yet, digging deeper, all might not be well at NVIDIA Corporation (NASDAQ:NVDA). The firm's free cash flow in the quarter dropped to $21.3 billion in the second quarter for a hefty drop over the year-ago figure of $48.6 billion. As a result, NVIDIA Corporation (NASDAQ:NVDA)'s free cash flow margin dropped by 38 points to 22%. Other potential headwinds could occur due to custom AI chips becoming popular and higher memory costs eating into margins.
During Q2, 285 hedge funds tracked by Insider Monkey owned a stake in NVIDIA Corporation (NASDAQ:NVDA) while 275 had held a stake in Q1. The firm trades at a forward P/E ratio of 25.97, which is lower than INTC's 72 and AMD's 64. Short interest as a percentage of float is negligible at 1.2%.