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Nvidia Reported Strong Earnings -- but Investors Should Keep Their Eyes on a Few Yellow Flags

By Jose Najarro – Aug 19, 2021 at 11:00AM

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Supply constraints may hinder the company's growth.

In today's video I look at Nvidia's (NVDA -3.75%) most recent earnings and share my thoughts on some bullish and bearish views on its earnings report. Here are some highlights from the video:

  1. Nvidia reported its second-quarter 2021 earnings after the market closed on Aug. 18. The company reported 68% year-over-year revenue growth and 15% sequential revenue growth. The increase in revenue was driven mainly by its record sales in its gaming and data center segments. 
  2. Guidance for the upcoming quarter is $6.8 billion in revenue, representing 44% YOY growth. Unfortunately, that means only low-single-digit sequential revenue growth, which may have some investors worried about Nvidia's growth story. During the earnings call, management explained that one of the most significant issues for Nvidia is that its supply cannot keep up with demand. 
  3. In its balance sheet, Nvidia ended the quarter with $19.65 billion in cash, cash equivalents, and marketable securities, an increase of roughly $7 billion in one quarter. Due to longer lead times throughout the supply chain, Nvidia has also increased its outstanding inventory purchases and long-term supply obligations. 

Click the video below for my full thoughts and analysis. 

*Stock prices used were the premarket prices of Aug. 19, 2021. The video was published on Aug. 19, 2021.

Jose Najarro owns shares of Nvidia. The Motley Fool owns shares of and recommends Nvidia. The Motley Fool has a disclosure policy.Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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