What Nvidia’s Surprising Stock Dip Says About Market Sentiment

On the March 2 episode of The Morning Filter, David Sekera and Susan Dziubinski discuss what Nvidia NVDA stock’s slump after earnings means for the markets and whether the stock is attractive today. Here is an excerpt from the show.

What Nvidia’s Stock Dip After Stellar Earnings Means for the Markets

Susan Dziubinski: All right, well, let’s move on to some new research from Morningstar about a few companies that reported last week. And we’ll start with Nvidia NVDA. Now, to no one’s surprise, the company blew past forecast and upped its guidance. So what stood out to you in the report, Dave?

David Sekera: Well, I think most surprising was the stock action afterward. I think the stock was down about 9% since earnings. Now, as you talked about, I mean, they beat in every way that a company can beat. Their quarterly results came in better than expected. Their guidance and their outlook both better than expected. I’d say the commentary from management, I would consider that to be somewhere between robust to bullish. And the stock still sold off afterward. Stock’s still kind of in the middle of the trading range we’ve seen since last October.

Taking a look at some of the fundamentals, revenue was up 73% year over year. Guidance for this quarter to be up 77% on a year-over-year basis. They’re looking for ongoing, sequential, quarterly growth for the rest of this year. And I’d note, that doesn’t include sales into China, which could provide even more upside to that top-line number. Taking a quick look at our model, for fiscal 2027, which is what we’re in right now, EPS growth, we’re looking for a 63% growth rate. And then we dial that back pretty quickly thereafter. So for fiscal 2028, we’re only looking for 20% growth, fiscal ’29, 15%, 2030, 14%, and then looking for it to kind of flatline in 2031. So putting in some more conservative estimates in those out years. But yet the stock’s only trading at 23 times our fiscal 2027 earnings estimate.

So I guess the question is, what does that actually tell me and tell me that the market is thinking? And I’m just going back to what we were talking about earlier. I don’t think the story for artificial intelligence any longer is about whatever top-line growth and earnings are going to be this quarter, or even next quarter, or even for the full year. I think the market’s really trying to figure out what to expect over the next three to five years. And that is what’s going to push these stocks higher or lower.

Is Nvidia a Buy Today?

Dziubinski: Now, Morningstar held its fair value estimate on Nvidia at $240. And as you pointed out, the stock pulled back. So is Nvidia attractive today?

Sekera: It is. It’s a 4-star-rated stock, trades at a 26% discount to fair value.

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