What to look for when Nvidia (NVDA) reports Q3 results?

NVIDIA Corporation (NASDAQ: NVDA) is scheduled to report third quarter 2020 earnings results on Thursday, November 14, after the market closes. Analysts expect the company to report earnings of $1.58 per share on revenue of $2.92 billion. This compares to earnings of $1.84 per share on revenue of $3.18 billion.

Nvidia has struggled with lower demand for graphic cards following a slump in the cryptocurrency space. The company has seen weak revenues in its gaming and data center businesses over the past two quarters. However, the demand in gaming chips could have picked up during the third quarter helped by new products and technologies.

The demand for data center components seems to have also gained momentum during the quarter and this is likely to help the topline results. NVIDIA’s investments in artificial intelligence capabilities also bode well as there is increasing growth potential in this space.

In the second quarter of 2020, NVIDIA reported revenue and earnings that were lower versus the previous year but ahead of Street expectations. Revenue dropped 17% to $2.58 billion, hurt by weakness in the data center and GPU businesses. Adjusted EPS fell 36% to $1.24.

Also read: NVIDIA Q2 2020 Earnings Conference Call Transcript

For the third quarter, NVIDIA has guided for revenues of $2.90 billion, plus or minus 2%. Adjusted gross margin is expected to be 62.5%, plus or minus 50 basis points. Adjusted operating expense is forecast to be approx. $765 million.

Shares of NVIDIA have gained 57% year-to-date and 36% over the past three months. The majority of analysts have rated the stock as Buy and it has an average 12-month price target of $201.83.

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