ASX investors are obsessed with Nvidia shares! Here's why

In the week before Nvidia Corporation (NASDAQ: NVDA) released its latest quarterly results, Aussie investors using the online trading platform Stake increased their buy orders for the US stock by 76%.

It appears they were hoping Nvidia's next set of results would spur a surge in the share price, as they have done on many occasions in the past, thereby delivering a nice short-term gain.

Samy Sriram, a market analyst at Stake, said:

Recent trading activity signals that Australian investors have a bullish bias towards Nvidia. Buy orders for Nvidia on Stake increased 76% last week compared to the same period last month. 

Aussie investors are also significantly invested in the company's results. In the three days leading up to its earnings report, it was the most traded stock on Stake, accounting for around a quarter of overall trading volume.

Unfortunately, those hopes of a short-term price spike for Nvidia shares appear dashed based on after-hours trading trends.

Nvidia shares closed down 0.76% to US$145.89 at the end of Wednesday's US trading session. The company posted its quarterly results after the market close.

While Nvidia's revenue increased by 94%, beating market expectations, traders seem less impressed with the guidance.

This is why Nvidia shares have fallen by 2.5% in after-hours trading to US$142.20 at the time of writing.

Not to worry, though.

It seems Aussie investors are more inclined to view Nvidia shares as a long-term buy and hold.

Sriram said:

While investors of US tech stocks clearly saw an opportunity for profit-taking following the Trump trade rally, they were more willing to hold onto their Nvidia stocks for the long haul.

This may be a good move if history is anything to go by.

Over the past five years, Nvidia shares have been to the moon, rising in value by 2,668%.

Sriram describes Nividia as the most important stock in global markets, given its pivotal role in the burgeoning artificial intelligence (AI) trend.

She also notes that industry watchers have suggested Nvidia's earnings are now more of a market catalyst than the Federal Reserve's interest rate decisions or US inflation data.

As my colleague Zach reported this morning, Nvidia's revenue increased 17% quarter over quarter and 94% year over year to US$35.1 billion. This beat analysts' expectations of US$33.17 billion.

Data centre revenue hit a record US$30.8 billion, up 112% year over year. Net income lifted 109% year over year to US$19.31 billion, with diluted earnings per share (EPS) rising 111% to 78 US cents.

Nvidia expects 4Q FY24 revenue of US$37.5 billion, plus or minus 2%, with gross margins of 73% to 73.5%. Sriram said this put Nvidia at risk of undershooting the $37 billion projected by analysts.

Given how investors have become accustomed to blowout quarters from the company, any hint of a miss can leave the market wanting more.

In addition to overall revenue projections, the slight dip in shares during the after market reflects ambiguity as to when, and how, supply constraints will be resolved.

That said, continued investment in AI from hyperscalers means Nvidia is in an enviable position.

eToro market analyst Josh Gilbert said Nvidia's quarterly profit was US$19.3 billion. He commented:

To give some context for how strong that number is, Nvidia generated only USD$16.6 billion in revenue in 2021. That underscores the staggering pace of growth Nvidia has seen in recent years and you'd be silly to bet against Jensen Huang and his team in the midst of this AI revolution.

Gilbert said any weakness in the Nvidia share price in the next US session may be a buy-the-dip opportunity.

Given what we've come to expect from Nvidia, this wasn't a blowout quarter, but it doesn't change the long-term story in any way. Demand for its chips is phenomenal, AI is only getting started transforming industries, and Nvidia is in the best position to benefit from the wave of spending we're seeing across enterprises.

Any weakness following the result will be seen as an opportunity for investors to own one of the best tech stocks in the business. Of course, there will be risks. There are some question marks on supply and its reliance on big tech, but Nvidia seems to eliminate concerns each quarter.

ASX tech shares finished slightly higher on Thursday, with Nvidia's results doing little to move our market.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) closed 0.12% higher, while the broader S&P/ASX 200 Index (ASX: XJO) finished down 0.04%.

The best-performing ASX 200 tech stock on Thursday was TechnologyOne Ltd (ASX: TNE), up 1.23% to $29.72.

Life360 Inc (ASX: 360) shares were next, up 0.84% to $21.71, followed by Data#3 Ltd (ASX: DTL), up 0.78% to $7.77.