New Nvidia Price Target as Pullback Sets Up My Next Buy

On Wednesday evening, tech giant and AI leader Nvidia (NVDA) released its fiscal first-quarter results. For the three-month period ending April 26, Nvidia posted adjusted EPS of $1.87 (GAAP EPS: $2.39) on revenue of $81.615 billion.

These top and bottom-line results both absolutely crushed expectations while that sales number was good enough for year-over-year growth of 85.2%. In addition, the company announced an additional $80 billion share-repurchase authorization and an increase in the quarterly cash dividend payment to $0.25 per share from $0.01. Adjustments were made primarily for changes in the value of equity investments.

Founder and CEO Jensen Huang commented in the press release:

“The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed. Agentic AI has arrived, doing productive work, generating real value and scaling rapidly across companies and industries. NVIDIA is uniquely positioned at the center of this transformation as the only platform that runs in every cloud, powers every frontier and open-source model, and scales everywhere AI is produced — from hyperscale data centers to the edge.”

Operations

As revenue grew 85.2% to $81.615 billion, the cost of those sales increased 17.6% to $20.458 billion. That left a gross profit of $61.157 billion (+129.3%) as gross margin soared to 74.9% from 60.5%. Operating expenses grew 51.5% to $7.621 billion. That left operating income of $53.536 billion (+147.4%). That put Nvidia’s operating margin at 65.6%, up sharply from 49.1% for the year-ago period.

After interest, other income & expenses and taxes, GAAP net income printed at $58.321 billion (+211%). That works out to fully diluted GAAP EPS of $2.39, up from $0.76. After adjusting for those gains mentioned above, net income lands at $45.548 billion (+139%), working out to $1.87 per fully diluted share. That was up from the year-ago comp of $0.78.

Segment Sales Performance

– – Data Center generated revenue of $75.2 billion (+92%), crushing expectations.

– – Hyperscale generated revenue of $37.869 billion (+115%).

– – AI Clouds, Industrial & Enterprise generated revenue of $37.377 billion (+74%).

– – Edge Computing generated revenue of $6.369 billion (+29%).

Guidance

For the current quarter, Nvidia is projecting revenue generation of $91 billion (+/- 2%). This was more than $4 billion above the $86.9 billion consensus and, in my opinion, was a serious beat.

Adjusted gross margin is seen at 75% (+/- 50 bps). Wall Street was looking for 74.5%, so this is a beat as well, though more moderate in impact.

Fundamentals

For the period reported, Nvidia generated operating cash flow of $50.344 billion (+83.6%). Out of that number came capex spending of $1.757 billion and $33 million in principal payments on capital items as well as intangibles. That left free cash flow of $48.554 billion (+85.8%). Out of that number, Nvidia spent $243 million on cash dividends paid to shareholders and $19.312 billion buying back its own common stock.

Turning to the balance sheet, Nvidia ended the period with a cash position of $80.572 billion and inventories of $25.797 billion. That left current assets at $150.995 billion. Current liabilities added up to $43.884 billion, including short-term debt of just $1 billion. That puts the current and quick ratios at 3.44 and 2.85, respectively.

Total assets amount to $259.474 billion, including only a small amount of entries labeled as either goodwill or other intangibles. Total liabilities stand at $64 billion, including long-term debt of $7.47 billion. This is one of the cleanest and strongest balance sheets in corporate America.

Opinion

This was a truly impressive quarter that Nvidia put together. Perhaps the most impressive part of it all is that the company has made no recent deliveries to China and does not expect to in the framing of the guidance provided.

Incredibly, the guidance remains strong. Cash flows are enormous and growing. Returns of capital to shareholders is about to pop. The balance sheet is exceptional.

The stock may be down on Thursday, but there is no way in heck that I am going to exit this name, or the shares of key competitor Advanced Micro Devices (AMD) for that matter.

Readers will see that since Nvidia’s late-October high, the stock developed a falling wedge pattern of bullish reversal. The stock broke out from that pattern in mid-April.

The shares have since taken back their 21-day exponential moving average (EMA), 50-day simple moving average (SMA) and 200-day SMA. Taking back these lines is what most likely got both portfolio managers and swing traders behind the NVDA trade as the company approached earnings.

Now, with support still visible, at least at the 21-day line, the $217 high of April 27 becomes the new upside pivot. That pivot provides for a considerably higher price target.

Moving on to the indicators, Relative Strength is in better-than-neutral shape while not having entered into technically overbought territory. The daily moving average convergence divergence (MACD) is still in generally bullish condition, but the dipping of the histogram of the 9-day EMA does signal some short-term weakness. I am a buyer on this weakness and will add once this article is published if the stock is still down for the day.

Nvidia (NVDA)

Price Target: $295

Pivot: $236

Add: Probably Today

Panic: Loss of 200-day SMA (currently $187)

At the time of publication, Guilfoyle was long NVDA and AMD equity.