NVIDIA Could Test January Low

NVIDIA Could Test January Low

NVIDIA Inc. (NVDA) is trading lower by more than 2% in Thursday’s pre-market, despite beating Q4 2021 estimates and raising Q1 2022 revenue guidance. The chipmaker posted a profit of $1.32 per-share, $0.10 better than expectations, while revenue rose 52.8% year-over-year to $7.64 billion, about $200 million higher than consensus. The Q1 increase was substantial, raising estimates from $7.28 billion to the $8.00 billion range. The company fired on all cylinders in Q4, reporting strong growth in gaming, pro visualization, automotive, and data center divisions.

Even so, the sell-the-news reaction wasn’t a surprise because chip stocks have traded poorly in 2022, dumping the PHLX Semiconductor Index (SOX) more than 10% since Dec. 31st. Chronic supply constraints have impacted the group’s performance while over-valuation has emerged as a potent headwind, with the SOX’s 41% return in 2021 lifting many components to unsustainable levels, especially with rising inflation putting a damper on growth.