Nvidia (NVDA) likely to report strong results once again, fueled by AI boom

Nvidia Corporation (NASDAQ: NVDA) has been at the forefront of the artificial intelligence revolution, developing high-tech AI chips that provide the computational power and efficiency required for training and deploying complex AI models. The upcoming earnings announcement is likely to draw significant investor interest amid speculation that Chinese tech firm DeepSeek’s budget-friendly AI model could affect Nvidia’s prospects.

Recovering from the recent fall, the GPU behemoth’s stock is maintaining an uptrend ahead of next week’s earnings. The latest closing price is around 6% lower than the record highs from January 06. However, the current price is more than double the value 12 months ago, as NVDA continues to be among the best-performing Wall Street stocks.

Bullish Outlook

Market watchers are buoyant about the tech firm’s financial performance in the final months of fiscal 2024 – they forecast a 62% increase in adjusted earnings to $0.84 per share in Q4. The consensus revenue estimate for the quarter is $38.09 billion, which represents a 72% increase from the year-ago quarter. That is higher than the management’s guidance of approximately $37.5 billion, issued a few weeks ago. The earnings report is expected to come on Wednesday, February 26, at 4:20 pm ET. Based on the long-term trend, the Q4 numbers are likely to beat estimates.

In the third quarter, the company’s adjusted profit more than doubled to $0.81 per share from $0.40 per share a year earlier, exceeding expectations. On an unadjusted basis, net income came in at $19.3 billion or $0.78 per share in Q3, vs. $9.24 billion or $0.37 per share in the year-ago quarter.

Broad-based Growth

The impressive bottom-line performance was driven by a sharp increase in revenues to $35.1 billion from $18.12 billion in Q3 2023, reflecting higher Data Center and Gaming revenues. The other operating segments grew in double digits.

Nvidia’s CFO Colette Kress said at the Q3 earnings call, “Nvidia is the largest inference platform in the world. Our large installed base and rich software ecosystem encourage developers to optimize for Nvidia and deliver continued performance and TCO improvements. Rapid advancements in Nvidia software algorithms boosted Hopper inference throughput by an incredible 5x in one year and cut time to first token by 5x. Our upcoming release of Nvidia NIM will boost Hopper inference performance by an additional 2.4x. Continuous performance optimizations are a hallmark of Nvidia and drive increasingly economic returns for the entire Nvidia installed base.”

Extending the momentum seen in recent sessions, Nvidia’s shares traded up 1% on Tuesday afternoon. It stays sharply above the 52-week average price.