NVIDIA announced earnings after the market closed yesterday and while revenue beat analysts forecast coming in at $20b versus the $17.9B consensus this was still below that which the market had been anticipating. Additionally with China sales expected to drop dramatically going forward current growth is unlikely to fill that gap.
Earlier this month George Soros exited his entire holding in NVIDIA and Stanley Drukenmiller sold one third of his position in the company who are plagued by speculation of nefarious accounting practices surrounding their relationship with Coreweave amongst others.
NVIDIA replaced Enron in the S&P 500 back in 2003. From then through to 2015 70% of its revenues were derived from gaming. In the last 10 years the companies stock is up 1000% with a Compound Annual Growth Rate (CAGR) of an unprecedented 60% per annum. Benefiting from the surge in Crypto Currency Mining applications driving demand for their GPU’s it is interesting to observe the rise in the price of BitCoin from $157 in January 2015 to north of $69,000 by November 2021 is a mirror image of the trajectory of NVIDIAs stock price during the same period which was followed by the 66% “pullback” in its stock price into the October 2022 low while BitCoin crashed from that lofty $69,000 to below $16000 with its low also being in October of 2022. In May of 2022 NVIDIA reached a settlement with the SEC over charges of “Inadequate Disclosures about Impact of Cryptomining”
Since that low in October 2022 NVIDIAs stock has gained a whopping 366% + while BitCoin has gained over just over 100%. Riding off the back of the AI Craze sweeping Wall Street coupled with the most extensive share buy back program in the companies history is this stock on the cusp of further dramatic gains or are we about to see a return to earth or even a repeat of the fate of the company who’s place it took in the S&P 500 – the once mighty Enron?