(Note: The author of this fundamental analysis is a financial writer and portfolio manager.)

There is nothing like blowing out revenue and earnings results and upping guidance only to have your stock move lower on the news. Just ask Nvidia Corp. (NVDA) and its shareholders how they feel. The company reported second-quarter revenue and EPS that easily beat consensus estimates, coupled with strong guidance, but all the market could think about was that it was not good enough. Despite that reception, the company is a solid growth story, but showing some signs of maturing.

If you look through the results, it's hard to find much wrong with the numbers. Well, except for two: data center and automotive. In an article on August 9, we highlighted that investors would not want to see signs of the company slowing or losing momentum. Nvidia's data center and automotive segments' sequential growth slowed considerably this quarter, which gave the bears the ammunition they needed to drive the stock lower. The growth rates even on a year-over-year basis have been slowing, and the comparison in future quarters will make that growth decelerate further.

(Data compiled using Nvidia CFO commentary reports)

In the fiscal fourth quarter of 2017, data center revenue growth spiked on a sequential basis. But those growth rates have dropped considerably the last couple of quarters, and that is what investors are likely getting nervous about. Why get nervous? Because data center and automotive were the segments of the business that Nvidia investors were most excited about. If that growth is slowing, then whole growth story is stagnating.

You get a sense that if data center only grows by 2 percent again next quarter, that growth year-over-year will still be solid. But it's a signal that growth will come down considerably for the fourth quarter, and even more for the first quarter. It is not a warning sign that Nvidia is in trouble; it is merely a sign that investors may start thinking about the multiple assigned to the company. Contracting multiples signal a stock price that either goes lower, or it means solid earnings results will no longer move the stock higher, giving earnings a chance to catch up with the stock price.

There's no doubt Nvidia numbers were strong and likely just a speed bump in the company's long-term growth story. It's just that the current valuation is lofty, and slowing growth rates in any part of its business will make investors think twice about freely throwing money at the stock.

Nvidia is maturing, and a maturing company's valuations get repriced. But that is different from saying the story is done; it is just getting told at a slower pace.

Michael Kramer is the Founder of Mott Capital Management LLC, a registered investment adviser, and the manager of the company's actively managed, long-only Thematic Growth Portfolio. Kramer typically buys and holds stocks for a duration of three to five years. Click here for Kramer's bio and his portfolio's holdings. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future performance.

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