Nvidia Corporation NVDA shares were up another 6 percent on Thursday and are now up 22 percent this week after the company reported a huge Q1 earnings beat.

Now that Wall Street has had time to digest Nvidia’s monster quarter, here’s a look at some of the key themes analysts are focusing on.

1. Artificial intelligence opportunity

Datacenter revenue was up 38 percent quarter-over-quarter and 186 percent from a year ago.

“We think NVDA’s near decade of investment in CUDA and its APIs have put it years ahead of the competition—said another way, NVDA-CUDA appears to be emerging as the ‘Wintel of AI,’” Jefferies analyst Mark Lipacis said.

2. Auto sales strength

Auto sales climbed to $140 million on the quarter, and the push toward increasingly technologically advanced automobiles could be a long-term tailwind for Nvidia.

“Autonomous driving remains a long-term opportunity given recent design wins at Bosch ad ZF, and developmental engagements with customer organizations grew 50% qoq,” UBS analyst Stephen Chin explained.

3. Gaming weakness

Disappointments on the quarter were few and far between, but the company’s gaming business was one of them.

“While gaming revenue was up an impressive 49% Y/Y, it did come in a bit lighter than our/consensus estimates,” Canaccord Genuity analyst Matthew Ramsay said.

4. Bears missed the mark

Nvidia bears that anticipated gaming weakness would lead to a market sell-off were overly pessimistic. Loop Capital analyst Betsy Van Hees said “shorts were being squeezed because they couldn’t see the forest through the trees.”

5. Gross margin pressures

Gross margins were up 1 percent from Q1 2016, but some analysts believe they could come under pressure in the future.

“While our [bearish] investment thesis has been challenged in the near-term, we remain Underweight NVDA due to signs of desktop GPU market saturation, lower margins from incremental Nintendo Switch revenue and the stock’s premium valuation,” Pacific Crest analyst Michael McConnell said.

6. Stock valuation getting steeper an steeper

Following the earnings jump, Nvidia shares are…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!