CNBC’s Jim Cramer commented on the tight trading of Nvidia Corp. NVDA, attributing it to the market’s struggle to value the company’s impressive earnings. Despite stellar fourth quarter results, Nvidia stock rose just 1% during the pre-market trading session on Thursday.
What Happened: On February 27, Cramer posted on X, “The tight trading in Nvidia is more of a sign that no one knows how to value amazing earnings than it is that there is something wrong. In another post, Cramer stated, “People will wonder if Nvidia has now become a ‘perfect’ security.”
However, Cramer’s comment suggests that despite these impressive earnings, the market is struggling to accurately value Nvidia’s stock, leading to its tight trading. This uncertainty may cause some to question whether Nvidia has become a “perfect” security, as Cramer puts it.
Why It Matters: Cramer’s post comes after Nvidia’s fourth quarter revenue surged to $39.3 billion, nearly eight times higher than it was five years ago. Meanwhile, net income for the quarter surged to $22.09 billion, marking an 80% increase from $12.29 billion in the same period last year.
Downplaying concerns over DeepSeek, Nvidia emphasized that highly advanced AI models would still demand significant processing power over time. CEO, Jensen Huang, stated that next-generation artificial intelligence models require “100 times more compute” than earlier versions.
However, the market’s tepid reaction as highlighted by Jim Cramer could be due to an overall decline in consumer confidence in the U.S. economy. Moreover, the increasing AI dominance from Chinese tech giants continues to be a cause of concern for investors.
According to Jacob Falkencrone, Global Head of Investment Strategy at Saxo Bank, “Wall Street isn't easy to impress, and after Nvidia's meteoric rise, expectations were sky-high. Investors were looking for a "beat and raise" moment—the kind of jaw-dropping numbers Nvidia has delivered in previous quarters. Instead, revenue guidance for Q1 came in at $43 billion, slightly above estimates but not the massive beat that would have justified another rally.”
Nevertheless, Falkencrone added, “This isn't to say Nvidia is in trouble—far from it. Demand for its AI chips remains extraordinary.”
Nvidia stock soared over 66% during the past 12 months, according to Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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