Nvidia Stock Rises 24% Amid AI Boost and Trade Easing

Nvidia shares surged 24% in May, driven by robust earnings and eased tariff tensions. The firm’s strong fiscal performance and new AI chip deals suggest positive growth, while geopolitical challenges and competitive risks persist.

Date: 03-06-2025

AI Rating: 7

Market Performance and Earnings Summary
Nvidia shares experienced a significant rally of 24.1% in May, driven largely by favorable conditions in the tech sector, particularly concerning trade tariffs and earnings results. The company reported a 69% increase in revenue, totaling $44.1 billion for the quarter, surpassing analyst expectations, which speaks volumes about its capacity to capture market share in a competitive environment.

Earnings Per Share (EPS)
The earnings per share saw an increase of 33% to $0.81. This is a positive indicator for investors as it reflects not only profitability growth but also operational effectiveness despite geopolitical challenges. The slight dip in profit growth due to a $5.5 billion inventory charge related to the H20 chip was offset by solid revenue performance.

Revenue Growth
The reported revenue growth of 69% is a strong signal and indicates robust demand for Nvidia's products, particularly in the AI chip market. This kind of growth is likely to attract both institutional and retail investors looking for high-growth opportunities.

Geopolitical Impact and Strategic Moves
Recent announcements of large AI deals from the Trump administration with the UAE and Saudi Arabia are crucial for Nvidia’s growth trajectory. These partnerships not only mitigate risks associated with the Chinese market limitations but enhance Nvidia’s long-term market positioning in the AI sector.

Profit Margins and Future Outlook
While Nvidia managed to maintain a steady profit margin despite the writedown, potential investors need to be aware of emerging competition from custom AI chips developed by cloud giants that may impact Nvidia's market share.

As Nvidia trades at 44 times earnings, this reflects investor confidence in sustained growth within the AI sector, contingent on the successful rollout of its innovative Blackwell chip and its ability to navigate international chip sales regulations. The risk-reward scenario seems balanced, suggesting a holding strategy may be prudent for short-term investors.

Stocks: NVDA