NVDA Earnings Preview: Nvidia likely to report blockbuster results for Q1

Nvidia Corporation (NASDAQ: NVDA) had an upbeat start to the new fiscal year, delivering impressive fourth-quarter results and forecasting strong revenue and margin growth for the first quarter. Investors will be watching closely when the GPU behemoth reports earnings next week, hoping to gain insights into the current state of the semiconductor industry. Continued heavy investments in artificial intelligence technology, combined with the first-mover advantage, have helped the company stay ahead of its peers in the AI chip race.

NVDA is probably the best-performing Wall Street stock currently, climbing above $900 this week from around $280 a year earlier. The shares peaked a few weeks ago, crossing the $950 mark for the first time. Though the stock pulled back later, it has regained momentum ahead of the earnings. Interestingly, NVDA remains a compelling investment option despite the high valuation, thanks to the company’s continuing dominance in the GPU market and its unique potential to leverage fast-paced AI adoption by enterprises across industries. Analysts are bullish on the stock’s prospects, with an average target price of slightly above $1,000.

Estimates

Nvidia is expected to publish April-quarter results on Wednesday, May 22, at 4:20 pm ET. Indicating that the Santa Clara-headquartered chipmaker might repeat the robust performance of the previous quarter, market watchers call for adjusted earnings of $5.17 per share for Q1, which represents a multi-fold increase from the prior-year quarter when the company earned $0.98 per share. Analysts estimate a three-fold growth in first-quarter revenues to $22.81 billion.

All major hyper-scalers are increasing their AI capex, and Nvidia stands to benefit hugely from that. Meanwhile, the company is facing competition from the likes of Intel and AMD in the AI space, lately. With more players entering the market, like Arm Holdings which recently announced a new business division dedicated to AI chips, the race is likely to become intense. At the same time, overexposure to the AI chip market makes Nvidia vulnerable to potential changes in trends in that area.  

 From Nvidia’s Q4 2024 earnings call:

“Countries around the world are investing in AI infrastructure to support the building of large-language models in their own language, on domestic data, and in support of their local research and enterprise ecosystems. From a product perspective, the vast majority of revenue was driven by our Hopper architecture along with InfiniBand networking. Together, they have emerged as the de-facto standard for accelerated computing and AI infrastructure.”

Impressive Results

The company has a good track record of delivering stronger-than-expected quarterly earnings, and the trend is expected to continue this time. In the final three months of FY24, adjusted profit surged to $5.16 per share from $0.88 per share in Q4 2023. Reported profit was $12.29 billion or $4.93 per share, vs. $1.41 billion or $0.57 per share a year earlier. Driving the strong bottom-line growth, revenues more than tripled year-over-year to $22.1 billion.

The stock opened above $900 on Tuesday and gathered momentum as the session progressed. The value has nearly doubled over the past six months.