In this segment of Motley Fool Money, host Chris Hill is joined by senior analysts Jason Moser, Matt Argersinger, and Ron Gross to discuss chipmaker NVIDIA (NVDA 0.87%), which put up superb results for the quarter that ended in late April, outperforming in every part of its business. But this is a stock that has already been a major winner over the past year, and lofty valuations don't leave much tolerance for any hint of a weak forecast. So the market took back some of those gains on word that cryptocurrency miners are severely reducing their GPU purchases.
Meanwhile, both TripAdvisor (TRIP +0.59%) and Booking Holdings (BKNG 2.01%) reported better-than-expected Q1 earnings, but only one of the online travel agencies got a stock uptick. The Fools explain why, and talk about the investment theses for them.
A full transcript follows the video.
This video was recorded on May 11, 2018.
Chris Hill: First quarter profits for Nvidia came in much higher than analysts were expecting, but shares of the chip maker falling a bit on Friday, nonetheless. Ron, you look at this stock, Nvidia has had such a great run the last two to three years. Is that why we're seeing a little bit of the dip?
Ron Gross: Another amazing stock that I've never owned a share of. It's amazing my wife stays with me. Up 100% this year, up 1,100% since 2015. Beat analysts' estimates this time around. Revenue up 66%. Really strong numbers. Beat consensus revenue estimates in each of its five segments. Again, very impressive.
Now, what investors, I think, are focusing on here is the comment in the conference call that they're seeing a slowdown in demand for products for cryptocurrency miners, whatever that means. [laughs] No, seriously. But, they're saying that July quarter sales of these types of products will be about a third of the April quarter's sales. So, a big slowdown in the hottest area right now. That might be what investors are focusing on. Advanced Micro Devices, also down on the news. Then, what you were alluding to, the stock is pretty much priced for perfection after a 1,000% increase. 37X EBITDA is a tough number, and you have to really put up solid, solid results.
Hill: Let's move on to online travel. Both TripAdvisor and Booking Holdings, AKA Priceline, reporting first quarter results this week. Both better than expected, but Jason, it was TripAdvisor's stock that got the bump. You looked at this quarter. Was it that great of a quarter for them?
Jason Moser: Well, I mean, a broken clock and all that stuff, right? It's been a very tough stretch here for TripAdvisor. But let me ask you, Chris, can you put a price on swimming with pigs? Can you put a price on swimming with dolphins?
Hill: I feel like Ron's question about seeing Black Panther was easier to answer.
Moser: I say that because TripAdvisor actually gave me the opportunities to do both of those things, in the Bahamas and Hawaii.
Argersinger: To swim with pigs?
Moser: Swimming with pigs, yeah. We'll talk more about it after taping, but Spanish Wells, Bahamas, baby. Go there.
Argersinger: Wow, I'm so intrigued.
Moser: It's been a very rough stretch for TripAdvisor. We talked a lot here over the past couple of years about this move they made to instant booking. They were trying to become more of an OTA, an online travel agency, like Booking, like Expedia. Didn't work out so well. But it seems like there are some signs they're putting this snafu in the rearview mirror. And if that is the case, if they can get back to a place where they're playing nice with booking.com and with Expedia, who are very big spenders on the TripAdvisor platform, then there's a little bit more certainty in the business, and we can get back to growing that top line a little bit.
On the bright side, this is still a very engaged platform. They have 433 million average monthly users. That was up 12% from the same quarter last year. 630 million reviews, up 26% from a year ago. There's a lot of reasons to appreciate what the actual platform is doing. Some not-so-great business decisions, I think, put them on hold for a little bit, but they might be turning a corner here. So, investors, if you own shares today, and I do, probably worth hanging onto to them to see how these guys play out.
Argersinger: Yeah. You mentioned some of those numbers. As far as popularity, TripAdvisor is as popular as ever. It has the richest data it's ever had. The problem I've always had is that next click. People go to TripAdvisor, you get the data, you read the reviews, you find out what you want to do, and you click away and go somewhere else.
Moser: Still very much an ad play, and that's just tricky.
Hill: What about Booking Holdings? I'm wondering if, to Ron's point about Nvidia, if Booking Holdings is a little bit priced to perfection? This was as rock-solid a quarter as they could have put up. Maybe the guidance scared people a little bit?
Moser: I don't know. You know why they changed their name to Booking Holdings? Because these guys know how to book stuff. $25 billion in bookings for the quarter, up 12% excluding currency effects. Room nights, up 13.2%, closing on 200 million, exceeding their own guidance for the quarter. A presence in over 220 countries. If you're going to get exposure to the travel industry in your portfolio, Priceline is a must. This is a core holding.
If you look at the charts, year-to-date, one year, five years, ten years, there's never been a bad time to own this stock because it's such a massive network. That's really what it's all about in this business, having that network. If you're on the side of selling rooms, you want to be a part of this network. And I think they just continue to build the business around that premise, and it's working out really well.
Hill: Does William Shatner still have some of those shares that he originally got?
Moser: I have to believe he hung on to a couple, right?
Gross: I don't think he did. I don't think so. I think he got out at a very low price.
Argersinger: Ouch!
