Please ensure Javascript is enabled for purposes of website accessibility

Why NVIDIA Corporation's Stock Spiked 81% in 2017

By Chris Neiger - Jan 10, 2018 at 10:18AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A 38% share price gain in May got the ball rolling.

What happened

Graphics processor maker NVIDIA Corporation (NVDA 5.38%) saw its share price jump 81.3% in 2017, according to data provided by S&P Global Market Intelligence, as the company beat analysts consensus earnings estimates throughout the year.

So what

NVIDIA's share price was relatively flat for the first few months of the year, until the company reported its fiscal first-quarter 2018 results in May. The chipmaker's top line jumped by 48% and earnings skyrocketed 144% year over year -- both which made investors very happy -- and the company's shareholders subsequently pushed up NVIDIA's shares 15% the day of the earning report release and 38% in all of May.

A stock chart with percentages and line graph.

Image source: Getty Images.

The company's shares continued to climb for months after that and gained more than 20% in the three months leading up to the company's fiscal third-quarter 2017 earnings report in November. NVIDIA grew its sales by 32% in the third quarter, to $2.64 billion, and earnings spiked by 60%, to, $1.33 per share -- analysts had been expecting just $0.92 in earnings in the quarter.

NVIDIA investors were also optimistic about the company's longterm prospects in artificial intelligence (AI), data centers, and driverless cars. The company makes about 59% of its revenue from sales of its graphics processors for the gaming market, but management has said that segments like AI could be a nearly $40 billion opportunity for NVIDIA in the coming years -- and investors are banking on those prospects.

Now what

NVIDIA's management is forecasting sales to be around $2.65 billion in the fourth quarter (plus or minus 2%). That would be about a 22% increase in the company's top line year over year and would likely help keep investor sentiment high for NVIDIA's shares.

Investors have already pushed up the company's stock price by 13% since the beginning of this year and optimism from NVIDIA's management -- as well as continued earnings and revenue growth -- could extend the trend as we head further into 2018.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

NVIDIA Corporation Stock Quote
NVIDIA Corporation
$188.11 (5.38%) $9.60

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.