NVDA
Nvidia (NASDAQ: NVDA) is set to report its first-quarter earnings, and expectations are sky-high. Analysts predict a staggering 200% increase in revenue and a 400% surge in profits compared to the same period last year. This dramatic growth is largely due to a significant rise in demand for Nvidia's chips, fueled by the AI boom.
According to Bloomberg, analysts forecast Nvidia’s adjusted earnings per share (EPS) to reach $5.65, a substantial jump from $1.09 in the previous year. Revenue is expected to hit $24.69 billion, up from $7.19 billion last year. To compare:
| Quarter | Adjusted EPS | Revenue |
|---|---|---|
| Q1 Last Year | $1.09 | $7.19 billion |
| Q1 This Year | $5.65 | $24.69 billion |
Stock Performance and Market Reaction
Nvidia’s stock has seen an extraordinary rise over the past year, climbing over 200%. Since the stock market lows in October 2022, Nvidia shares have surged nearly 700%. The stock reached a record high on Tuesday, May 21, 2024, underscoring investor confidence ahead of the earnings report.
The majority of Nvidia's revenue will come from its Data Center business, which is expected to generate $21 billion, a dramatic increase from $4.28 billion in Q1 last year. This segment has become the powerhouse of Nvidia's earnings, driven by demand from major players like Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG), Meta (NASDAQ: META), and Microsoft (NASDAQ: MSFT).
Nvidia's Gaming division, once its largest revenue source, is also experiencing growth. Analysts expect gaming revenue to reach $3.5 billion, up from $2.24 billion in the same quarter last year. This rebound indicates strong demand for Nvidia's graphics cards among gamers.
Analyst Optimism and Price Target Increase
Stifel analyst Ruben Roy has raised his price target for Nvidia shares to $1,085 from $910, anticipating that Nvidia will exceed expectations and raise its guidance for the next quarter. This optimism is shared by analysts at BofA Global Research and Loop Capital, who believe in Nvidia's potential despite near-term challenges.
Despite the positive outlook, there are concerns about the transition from Nvidia's current Hopper line of AI chips to its upcoming Blackwell line. Some customers may delay orders for Hopper chips in favor of the more powerful Blackwell chips. For example, Amazon reportedly paused some orders, transitioning an upcoming project to Blackwell chips.
Additionally, AMD (NYSE: AMD) and Intel (NASDAQ: INTC) are gaining ground with their AI chip offerings. Microsoft’s yesterday's announcement during its "Build Conference" to use AMD’s MI300X chips, while still leveraging Nvidia’s chips, highlights this competitive landscape.
Nvidia's upcoming earnings report is poised to be a significant indicator of the company's future amid the rapidly evolving AI market. Investors and analysts alike will be closely watching the results and the company's guidance for the next quarter.
| Aspect | Q1 Last Year | Q1 This Year |
|---|---|---|
| Adjusted EPS | $1.09 | $5.65 |
| Revenue | $7.19 billion | $24.69 billion |
| Data Center Revenue | $4.28 billion | $21 billion |
| Gaming Revenue | $2.24 billion | $3.5 billion |
| Stock Performance | +200% (1 year) | +700% (since Oct 2022) |
