Nvidia {{ m-tag option="price" ticker="NVDA" currency="USD" }} has experienced a remarkable surge in 2024, with its shares soaring over 150% YTD. This impressive growth has added approximately $1.82 trillion to Nvidia's market capitalization and contributed significantly to new highs in the S&P 500. As of August 23rd, the stock is trading at about 37 times its forward earnings, compared to an average of 29 for the top six tech companies in the benchmark index.

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Tech Giants Drive Demand for Nvidia's GPUs

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Major tech giants such as Microsoft {{ m-tag option="price" ticker="MSFT" currency="USD" }} have driven the demand for Nvidia’s powerful graphic processing units (GPUs), which are heavily investing in AI infrastructure. Nvidia's GPUs are essential for large-scale computing tasks and are currently irreplaceable in modern data centers. This high demand has been a key factor in Nvidia’s impressive stock performance.

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Revenue Growth Despite Margin Pressure

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Nvidia's financial performance has been stellar, with a projected YoY revenue increase of approximately 112% for Q2, reaching $28.68 billion, according to LSEG data. However, the company is facing some margin pressures, with an expected drop in its adjusted gross margin to 75.8%, down more than 3 percentage points from the previous quarter. This margin decline is attributed to the costs associated with ramping up production to meet rising demand.

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Stock Volatility

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‍Despite experiencing a 20% decline in stock value during July and early August, Nvidia's stock has recently rebounded, trading just 5% below its record high set in June. Looking ahead, Nvidia is projected to achieve a 75% increase in Q3 revenue, totaling $31.69 billion.

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Earnings Growth and Investor Focus

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Wall Street anticipates significant earnings growth for Nvidia, with an estimated 109% increase YoY and a 99% revenue jump compared to last year's quarter. Investors will also be keenly watching for updates on any potential delays related to Nvidia’s new Blackwell chip.

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