NVIDIA: Good news is bad news?

Yesterday, at market close, NVIDIA reported that its profit had doubled over the past year.

Nvidia also informed that its next-generation Blackwell GPU is up to four times faster than its current model on MLPerf, an industry benchmark for measuring AI and machine learning performance. It plans to ramp up chip production in Q4 and expects to ship "several billion dollars" in Blackwell revenue.

The results were better than consensus estimates on Wall Street: margins were higher than 60%; revenue hit a record high of $30 billion and better-than-expected adjusted earnings of $0,68/share.

However, the stock fell in after-hours trading following the report. Why?

One possible explanation is that investors focused on slowing growth from quarter to quarter, noting revenue was up 15% from the fiscal first quarter compared with an 88% gain a year earlier.

Additionally, adjustments like this sometimes happen because traders will buy a stock in anticipation of an event only to sell it when it actually happens, locking in gains when they do. There may be some of that going on here.

The stock correction in value looks more like traders are trying hard to evaluate whether Nvidia's price is justified after its spectacular run. The stock has gained 154% this year. Two years ago, a share cost about $15; today it's about $120, adjusted for stock splits.

Investors also noted Nvidia's operating margin narrowed to 62% from 64.9% the quarter before.

Should you be worried? In my opinion, NO!

The value of a company depends on demand, guidance, and growth, and such key metrics are all applicable to NVIDIA.

Nvidia's share fall represents a potential buying opportunity for investors - BUY THE DIP - as the artificial intelligence chip maker should continue to grow above analysts' forecasts.

Nvidia's results for its fiscal second quarter and guidance for the current quarter beat estimates across the board, even though they failed to satisfy the most optimistic expectations.

If you look at the 5-minute chart, you can check NVIDIA's share price action.

If you had bought 100 shares at $122,83, its minimum value after the report release, you could now (at 2.20 p.m.) have sell them at $126,65. This would give you a gain of $3,82 per share, equivalent to $382 in just a few hours. Not bad for a trading day...

*This is not financial advice