Don’t give up on Nvidia (NVDA) amid the post-earnings sell-off. At least that’s the word from AI investor Cathie Wood.
Nvidia is still a high-growth stock, the ARK Invest founder told Yahoo Finance at the Bitcoin Investor Week conference in New York City on Friday. Wood thinks the stock could still be a 20% compound grower, even if the company’s margins compress a little due to new AI chip competition from AMD (AMD) and Amazon (AMZN).
“This market won’t be Nvidia’s alone, but all praise to Nvidia for the incredible opportunities it has created,” Wood said. “It really got the AI revolution going, and we think it’s still going to play a mighty role.”
Wood said she continues to hold Nvidia stock.
In its earnings release on Wednesday evening, Nvidia said it expects gross profit margins of 70.6% to 71% in the first quarter as it contends with the production ramp-up of its new Blackwell chip.
The margin outlook of 71% is “a little concerning,” Benchmark Company managing director and senior research analyst Cody Acree said on Yahoo Finance’s Market Domination. “I think that’s indicative of more pricing pressure, more competition from AMD (AMD), and more price sensitivity at their customers as they’re investing their own dollars to create their own ASICs [application-specific integrated circuits].”
After toggling between gains and losses on Thursday, Nvidia stock closed down 8.48%. The stock rebounded by 1.5% on Friday.
On the company’s earnings call, Nvidia execs sought to push back against the bears, who have put forth a narrative that there will be a digestion period for AI investments by hyperscalers such as Amazon (AMZN) and that Nvidia’s margins may have peaked.
“We’re going to have to continue to scale as demand is quite high, and customers are anxious and impatient to get their Blackwell systems,” Nvidia founder and CEO Jensen Huang said. Huang teased several new powerful chips set to be unveiled at the company’s March 17 GTC conference.
Nvidia CFO Colette Kress added: “Once our Blackwell fully rounds, we can improve our cost and our gross margin. So we expect to probably be in the mid-70s later this year.”
Brian Sozzi is Yahoo Finance’s Executive Editor. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email brian.sozzi@yahoofinance.com.
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