After revealing stunning numbers in their FY quarterly earnings, Nvidia Corp (NVDA:US)’s stock price shot up in a single trading session. On the day following the earnings reveal, NVDA stock opened at $385.23 before closing at $379.80. This marked an explosive price hike of almost 24.37% in a single day.
This announcement comes at a time when analysts predicted the semiconductor and tech industries to slow their pace this year. Furthermore, personalities such as Cathie Wood and Jim Cramer believed that Nvidia was overvalued with major investors, including some US politicians, pulling out of the stock.
At present, Nvidia has a Market Cap of almost $990.74 billion while the stock price is up by almost 180.20% year-to-date.
On May 24, Nvidia disclosed its earnings for the fiscal first quarter of 2024. Quarter-on-quarter, the company’s revenues had surged by 19% along with a 44.48% rise in net income for the same period.
While this quarter’s revenue came out at an approximate value of $7.19 billion, the company forecasted that it could hit as much as $11 billion for the ongoing three months period. A lot of these positive numbers can be attributed to one media frenzy.
Jensen Huang, the company founder, and CEO, said, “The computer industry is going through two simultaneous transitions — accelerated computing and generative AI.” He added that tech companies from around the world have now entered the race to add generative AI in every area of their vocation.
Insiders Cashing Out?
Interestingly, at around the same time, two insiders at the company were seen to be cashing out on NVDA’s newfound stock gains.
On May 26, 2023, two Independent Directors at Nvidia Corp filed Form 144s for millions worth of NVDA shares.
Persis Drell filed her form for 7,800 shares for a total worth of $3.04 million. She filed her form via UBS financial services.
Tench Coxe filed his form for 100,000 shares for a total worth of $38.95 million. His form was filed with Stifel Nicolaus & Company Inc as the broker.
Both Insiders filed their forms at a value of $389.46 per share.
Persis S. Drell previously served as the Provost of Stanford University since 2017 and is a well-known personality in the field of Physics and tech innovation. Drell has been serving on Nvidia’s board since 2015.
On the other hand, Tench Coxe boasts a much longer history, having been with Nvidia since its founding in 1993. The Former MD of a private equity firm called Sutter Hill Ventures. With an MBS from Harvard Business School, Coxe has a vast experience in the finance community.
At the end of FY 2023, Coxe was in the ownership of 4,185,524 NVDA shares while Drell owned 42,559 shares.
How Far Can NVDA Go?
Nvidia has a history of making graphic cards for games, before shifting into the semiconductor market. The latter has picked up pace in the past years thanks to advancements in technology, the CHIPS act, and a race to make home country America, the chip-producing capital of the world. Nvidia’s recent earnings announcements also supported that the company’s processors can carry the load of AI tech. A large portion of the company’s revenues is attributed to Data center earnings which reached $4.28 billion in value, 14% higher year-on-year. Although their data center operations are becoming the main focus of the company, Nvidia is bringing AI into the gaming scene as well. On May 29 at 2023 Computex Taipei, CEO Huang introduced a demo game where players can speak and interact with NPCs, using generative AI.
Analysts have forecasted that the semiconductor industry might underperform in 2023 compared to the previous year. Although, Nvidia has already reached the $1 trillion market cap at present, reaching the ranks of other big names in the tech market. On the other hand, Cathie Wood’s ARKK loaded off NVDA shares prior to the price hike, saying that the stock is in “bubble territory”. Considering the recent form 144s by both Drell and Coxe as well as AI advancements, only time will tell whether the ‘bubble’ will pop or grow even bigger.