NVIDIA share price: what’s the outlook as stock rallies after Q2 results

Last week, the US-based graphics chip maker released its second quarter results that beat analysts’ expectations and helped its stock rally more than 11% in the days that followed.

NVIDIA reported its second-quarter (Q2) earnings after market close on Thursday last week, with the company’s results beating analysts’ expectations.

That is not to say that the results were impressive, with the graphics chip maker seeing revenue decline by 17% to $2.58 billion compared with the same period a year ago, while earnings per share (EPS) slipped 36% to $1.24.

However, analysts had expected to the situation to be a lot worse, with the company’s EPS able to beat analysts’ consensus forecast of $1.14 per share.

Better-than-expected Q2 results boost NVIDIA shares

When markets on Friday, NVIDIA saw its share price climb more than 7% to close at $159.56 a share. The company’s share price saw similar gains at the start of this week, with its stock gaining a further 7% on Monday, closing at $170.78 a share – though ending Tuesday’s session a touch lower at $167.87.

Things are certainly looking brighter for the company this year, with its share price up 23% on a year-to-date basis. However, over the last 12 months the US-based chip maker has seen its stock lose a third of its value, with it trading as high as $253 a share this time last year.

Back in the game

Looking ahead the company to its third quarter, NVIDIA expects to generate revenue of $2.9 billion, which represents an 8.8% decline on a year-over-year basis, but a 12.4% increase on the previous quarter.

Its sales will be driven primarily by its supercharged graphics processor units (GPUs) lineup which includes the GeForce RTX2060 SUPER, RTX 2070 SUPER and RTX 2080 SUPER. All of which offer real-time ray tracing, a rendering method that is considered the holy grail of graphics technology due to its ability to create lifelike light and shadows

‘Real-time ray tracing is the most important graphics innovation in a decade. Adoption has reached a tipping point, with NVIDIA RTX leading the way,’ NVIDIA CEO and Founder Jensen Huang said.

’NVIDIA accelerated computing momentum continues to build as the industry races to enable the next frontier in artificial intelligence, conversational AI, as well as autonomous systems like self-driving vehicles and delivery robots,’ he added.

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