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Why NVIDIA Stock Jumped 14.2% in February While the Market Got Clobbered

By Beth McKenna - Mar 3, 2020 at 7:00AM

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Shares of this AI leader bucked the coronavirus-driven market sell-off.

What happened

NVIDIA (NVDA -3.97%) stock gained 14.2% in February, according to data from S&P Global Market Intelligence. By contrast, the S&P 500 index suffered an 8.2% drop last month over fears that the novel coronavirus, COVID-19, might dampen global economic growth. 

Shares of the graphics processing unit (GPU) and artificial intelligence (AI) leader have returned 17% in 2020 through March 2, outpacing the broader market's negative-4% return. 

Outline of a person's profile filled in with things digital -- concept for artificial intelligence.

Image source: Getty Images.

So what

We can attribute NVIDIA stock's robust performance last month to the company's Feb. 13 release of strong fiscal fourth-quarter 2020 results. The quarter's revenue and earnings beat the Wall Street consensus estimates, and first-quarter guidance for both the top and bottom lines came in better than analysts had been expecting. Aptly, investors showed their love for the results the next day, Valentine's Day, by driving the tech stock up 7%.

Fueled by optimism over NVIDIA's future and positive comments from Wall Street analysts, the stock rose 16.2% in the three-day period following the earning release.

In Q4, NVIDIA's revenue soared 41% year over year to $3.11 billion, driven by record revenue in its AI-driven data center platform. Earnings per share (EPS) adjusted for one-time items rocketed 136% to $1.89.

Now what

For the first quarter of fiscal 2021, management guided for revenue of $3 billion. That represents growth of about 35% year over year. 

NVIDIA also guided (albeit indirectly, by providing a bunch of inputs) for adjusted EPS of $1.61, according to my calculations. That represents growth of 83% year over year.

 

Beth McKenna owns shares of NVIDIA. The Motley Fool owns shares of and recommends NVIDIA. The Motley Fool has a disclosure policy.

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