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Despite its Price Adjustment after the Stock split, Nvidia Stock Remains Valuable

AI prodigy Nvidia’s (NASDAQ:NVDA) stock has skyrocketed from $15 (split-adjusted) to nearly $121 today. It surpassed Apple to become the world’s second most valuable corporation. NVDA recently announced a stock split, which I predicted. Following its big earnings beat, the stock has continued to amaze with new highs (+144% year to date). Nonetheless, my thesis remains unchanged: NVDA is appealing in the long run due to its obvious AI supremacy and exponential AI growth potential.

On May 22, Nvidia announced again another record-breaking Q1 result, fueled by strong continuing computing and accelerated generative AI demand momentum.Adjusted earnings of $6.12 per share significantly exceeded the consensus forecast of $5.60 per share.

Also, the amount was significantly higher (+461%) than the Fiscal Q1-2024 (ending April 2023) value of $1.09 per share. Impressively, Q1 revenue increased 262% year on year to $26.04 billion, exceeding the average expectation of $24.59 billion. Furthermore, its adjusted gross margin increased by 13.8 percentage points to a record high of 78.4%, up from 64.6% the previous year.

Concurrent with the earnings release, the firm announced a 10-for-1 stock split. While the stock split has no effect on the company’s valuation or performance, it does mean that NVDA will be more accessible to individual investors, causing a short-term increase in the share price.

Additionally, the company increased its quarterly cash dividend by 150% to $0.01 per share, post-split. NVDA shares began trading on a split-adjusted basis today. Interestingly, this is Nvidia’s sixth stock split.

Importantly, NVDA’s crown jewel business, Data Center revenues, grew 427% year on year to $22.6 billion. The division accounts for 86% of the firm’s overall revenue. As expected, revenues in China fell due to US export control constraints. Management confirmed during the earnings call that “business in China is substantially lower than the levels of the past.”

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