Shares of NVIDIA Corp. (NVDA) gapped higher after it smashed first-quarter estimates on Tuesday evening. With NVDA rallying over 12% as I write this, can the gaming chipmaker keep up the momentum? Let’s find out.
The company reported that first quarter fiscal 2018 revenue soared 48% year-over-year to $1.94 billion, up from $1.3 billion in the first quarter 2017. Analysts were expecting sales of $1.91 billion, so NVDA posted a slight sales surprise.
First-quarter earnings per share surged 85% year-over-year to $0.85, compared with $0.46 per share in the same quarter a year ago. The consensus estimate was for earnings of $0.67 per share, so NVDA posted a stunning 26.9% earnings surprise.
With results like these, it’s easy to see why NVDA shares rallied after the announcement. And NVIDIA is expected to keep up the momentum for the foreseeable future.
Looking ahead to the second quarter of its fiscal year 2018, NVIDIA expects revenue to be about $1.95 billion, or 36.4% annual sales growth. This is above the current consensus estimate for $1.89 billion. NVIDIA also noted that it will pay a quarter dividend of $0.14 per share on June 14. All shareholders of record on May 23 will receive the payment.
For these reasons and more, I consider NVDA an A-rated Strong Buy. In fact, I’ve recommended it in my Blue Chip Growth newsletter since June 2016; in that time the stock has rallied 140%. But while NVIDIA has had quite the run, I see further upside potential.