NVIDIA’s Mind-Blowing Fourth Quarter

Last week’s holiday-shortened four-day week was all about NVIDIA, whether investors were anticipating Wednesday afternoon’s earnings report or reacting to it. Strong numbers would provide added fuel to the bull market that started in October 2022, while a disappointing print would prove a major setback for those betting on AI and next-generation computing. Investors began the week seemingly concerned about the stock’s lofty valuation and even loftier expectations , with Q4 revenue expected to more than triple on a year-over-year basis . The stock dropped 4.4% on Tuesday, dragging down the tech sector and major market averages. The NASDAQ slipped 0.9%, while the S&P 500 dropped 0.6% .
NVIDIA slumped again on Wednesday, sliding another 2.9%. Cybersecurity giant Palo Alto Networks added to tech-investor angst by talking down revenue expectations on its Q4 earnings call, after which that stock plunged a staggering 28%. The bond market also slumped on Wednesday, as minutes from the Federal Reserve’s January meeting showed a central bank in no hurry to cut interest rates . The number of rate cuts expected in 2024 has now dropped to just three . And those reduced expectations have left the benchmark bond index stuck in the red for the year through February 23.

But the real action of the week took place after the market closed on Wednesday. NVIDIA reported stunning Q4 results: year-over-year quarterly revenue jumped from $6.1 billion to $22.1 billion, annual net income ballooned to $29.8 billion from $4.4 billion, and projections exceeded expectations by a wide margin. NVIDIA now projects $24 billion in revenue for the April quarter, higher than the $22 billion expected by Wall Street. The report pushed NVIDIA shares more than 16% higher to an all-time high . The stock has now gained more than 230% over the past 12 months. Looking at the bigger picture, the rally lifted NVIDIA’s market cap above that of tech giants Google and Amazon, putting it third behind only Microsoft and Apple on the list of the largest US companies .

NVIDIA carried the broader markets higher on Thursday, with the S&P 500 and Dow Jones Industrials both reaching all-time highs. Meanwhile, the tech-heavy NASDAQ jumped nearly 3% and enjoyed its best day since early 2023. The stock market took a bit of a breather on Friday, with the major market averages little changed on the day, but still nicely higher for the week.
This week will likely be dominated by economic data rather than earnings releases. We’ll get reports on home prices, consumer confidence, jobless claims, and perhaps the most important of all, January PCE – the Fed’s preferred inflation measure. But for now, NVIDIA, take a bow.