NVIDIA BLOWS THE DOOR OFF EARNINGS
NVIDIA adds $220 billion to Market Cap
WOW! I’m blown away.
Nvidia earnings came in at the following provided by Seeking Alpha
Announce Date
5/24/2023
EPS Normalized Actual $1.09 (Beat by $0.17)
EPS GAAP Actual $0.82 (Beat by $0.21)
Revenue Actual $7.19B
Revenue Surprise Beat by $669.47M
Lets compare the Year over Year numbers from Nvidia website
This is what’s missing from the headlines. Call me a Nervous Nellie but you can’t ignore the -13% decline in revenue. Net Income was up on a GAAP bases of 26% and Non-GAAP down 21%. Why the difference? The following is according to Bard, Googles AI program:
GAAP stands for Generally Accepted Accounting Principles. It is a set of accounting standards that companies are required to follow when reporting their financial results. Non-GAAP earnings are earnings that have been adjusted to exclude certain items, such as one-time expenses or gains. Companies use non-GAAP earnings to provide a more accurate picture of their underlying financial performance.
There are several reasons why companies might use non-GAAP earnings. One reason is to exclude items that are not considered to be part of their core business operations. For example, a company might exclude the cost of a one-time restructuring charge or the gain from the sale of an asset. Another reason for using non-GAAP earnings is to compare their performance to previous periods or to their competitors. By excluding certain items, companies can make their earnings more comparable.
However, there are also some risks associated with using non-GAAP earnings. One risk is that companies may use non-GAAP earnings to make their financial performance look better than it really is. For example, a company might exclude a one-time expense that is likely to recur in the future. Another risk is that investors may not be able to compare non-GAAP earnings from different companies because each company may use different methods to calculate their non-GAAP earnings.
Overall, non-GAAP earnings can be a useful tool for investors, but they should be used with caution. Investors should understand how non-GAAP earnings are calculated and what items have been excluded. They should also compare non-GAAP earnings from different companies using the same methods.
Here are some of the key differences between GAAP and non-GAAP earnings:
GAAP earnings are based on generally accepted accounting principles, while non-GAAP earnings are not.
GAAP earnings are more comprehensive than non-GAAP earnings, as they include all items of income and expense. Non-GAAP earnings may exclude certain items, such as one-time expenses or gains.
GAAP earnings are more comparable between companies, as they are all calculated using the same standards. Non-GAAP earnings may be more difficult to compare between companies, as each company may use different methods to calculate their non-GAAP earnings.
Investors should use both GAAP and non-GAAP earnings when evaluating a company's financial performance. GAAP earnings provide a more comprehensive picture of the company's financial performance, while non-GAAP earnings can help investors to identify trends in the company's earnings.
What is eye catching is the difference between the GAAP and Non-GAAP numbers in some cases. The guidance was positive for the coming quarter, $11 billion on Revenue.
My concern is the buildup to yesterdays earning and now the days and weeks after. Is this a GameStop moment? Will we see a mass exists from the stock over the next week as the retail investor jumps on this crazy train? Got to believe Stanley Druckenmiller will be taking profits this week.
So is this the time to enter Nvidia? This is not a recommendation or advise. I’d say there are more headwinds facing the overall global economy that will have an effect on AI and the high Beta Stocks in the short-term. But for the long-term? AI has a major place in our future.
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