What’s Next For Nvidia Stock After Blowout Q2

Nvidia (NASDAQ: NVDA) posted an exceedingly strong set of Q2 FY’24 results on Wednesday and issued upbeat guidance for the current quarter. Technology companies and developers have been scrambling to deploy generative AI into their applications and this is driving a windfall of sorts for Nvidia, whose high-end graphics processing chips, such as the A100 and H100,. remain the go-to products for AI workloads. Over Q2, Nvidia’s revenue roughly doubled year-over-year to $13.51 billion, beating its own guidance of about $11 billion. Nvidia is also turning incredibly profitable due to the AI surge. Net income rose over 5x compared to last year to $6.7 billion, as gross margins rose to 71.2% from 45.9% in the year-ago quarter. The company has attributed the increase in margins to higher sales of complex data center products as well as bundled software.

Notably, NVDA stock had a Sharpe Ratio of 1.1 since early 2017, which is higher than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.