NVDA - 3 Risks to Consider Before Buying Nvidia Stock After the 10-for-1 Stock Split
2024-06-30 07:02:00 ET
Nvidia (NASDAQ: NVDA) is one of the hottest stocks on the market -- especially after its 10-for-1 stock split made it easier for smaller investors to experience the artificial intelligence (AI) boom that sent its shares up 150% this year alone. But while stock splits are exciting, they don't change a company's market cap (the value of all shares combined) or its valuation relative to growth potential and earnings.
With AI technology in its early stages, Nvidia still looks like a long-term winner because of its exposure to the market. But new investors should be aware that they are late to the party. Let's explore three reasons I'm downgrading the industry-leading chipmaker from a screaming buy to an optimistic hold.
When you crack open Nvidia's income statement, the first thing that jumps out is the company's first-quarter gross profit of $20.4 billion. This metric represents the revenue earned from selling its products minus the direct costs of creating them (before overhead expenses like office salaries, research, or advertising). And with a gross margin of 78.4%, this number is extraordinarily high for a hardware company.
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3 Risks to Consider Before Buying Nvidia Stock After the 10-for-1 Stock Split