It took a couple of earnings warnings to do it, but at long last, NVIDIA (NVDA) has managed to “beat earnings.”

Reporting after the close of trading Thursday, NVIDIA told investors that in fiscal Q4 2019 (yeah, NVIDIA works off kind of a strange calendar) it booked $2.21 billion in revenue, and earned $0.92 per share, GAAP. That was better than the $0.91 per share that analysts had expected NVIDIA to earn — but here’s the thing:

If you look closely at Yahoo! Finance’s running tally of analyst estimates for NVIDIA’s Q4 earnings (estimates derived from guidance the company itself gave), three months ago, Wall Street was looking for NIVIDA to book profits of $1.81 per share. Two months ago, that expectation had already been rolled back to $1.40 a share. Only in the days just prior to NVIDIA’s report, it seems, did analysts reluctantly lower their expectations enough to be satisfied with a mere $0.91.

And that was the estimate that NVIDIA ended up “beating.”

How low can you limbo?

Was it worth the trouble? Investors seem to think so. In after-hours trading, NVIDIA shares leapt 7%, on top of gains of 1.1% booked earlier in the day. But here’s the next thing:

The $0.92 that NVIDIA ended up “beating” earnings with was 48% less profit than NVIDIA earned in the year-prior quarter. NVIDIA’s $2.21 billion in sales were down 24% year over year. So if NVIDIA won a victory today, it was Pyrrhic to say the least. As CEO Jensen Huang lamented, “the combination of post-crypto excess channel inventory and recent deteriorating end-market conditions drove a disappointing quarter” — and really threw NVIDIA for a loop.

Pulling back the camera

And yet, viewed as a whole, 2018 still wasn’t a bad year for NVIDIA. Overall, sales grew 21% to $11.72 billion, while GAAP profits were up an even stronger 38% to $6.63 per diluted share. If Q4 was a bit of a letdown, it was from a very tall peak.

The question investors face now is: Will NVIDIA’s fortunes keep rolling downhill, or can they bounce back?

If the latter, it won’t be a quick trip to the trampoline. Giving new guidance for fiscal Q1 2020, NVIDIA says it’s targeting sales of only $2.2 billion, which looks like about a 31% decline from the $3.2 billion that NVIDIA collected in fiscal Q1 2019. The company is targeting about a 58.9% gross margin on those sales, “plus or minus 50 basis points.” But even if things end up much more plus than minus, it looks like NVIDIA’s profit margin will take a big hit relative to the 64.5% gross margin it achieved a year ago.

On top of all this, analysts are currently forecasting $1.04 per share in earnings on $2.4 billion in sales for Q1. So it seems almost certain that NVIDIA is heading for another earnings miss at the end of this quarter.

Investors who rushed to buy NVIDIA stock on its “earnings beat” could soon rue the day.

Overall, NVDA has had 22 bullish analysts in its corner over the last three months, 9 analysts playing it safe on the sidelines, and one who sees a bearish scenario in play. Importantly, the 12-month average price target of $188.11 showcases 22% in upside potential for the stock. (See NVDA’s price targets and analyst ratings on TipRanks)