2 Reasons to Sell Nvidia Stock (and 1 Reason to Buy)
With shares down roughly 15% since the company's second-quarter earnings report on Aug. 8, Nvidia's (NASDAQ: NVDA) legendary bull run might be in trouble. While operational results remain as strong as ever, investors may be growing concerned about the sustainability of Nvidia's business model and the artificial intelligence (AI) industry as a whole. Let's discuss two reasons to consider selling the stock and one reason to buy the dip.
Gross profit margin compares a company's revenue to the direct production costs of selling its goods or services before overhead expenses like office salaries, advertising, or research. Typically, this metric favors software-as-a-service (SaaS) companies that don't sell physical products. But with a gross margin of 75%, Nvidia bucks the trend.
For context, Microsoft, the biggest SaaS company in the world, has a gross margin of just under 70%, while , the parent company of Google and YouTube, stands at 57%. Nvidia is now selling physical hardware at a greater markup than others can sell digital services. And this dynamic doesn't look natural or sustainable over the long term.
Source Fool.com
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