What Investors Need to Know Ahead of Nvidia's Earnings Report
Nvidia will report earnings for its fiscal first quarter of 2025 after the bell on Wednesday. NVDA has seen remarkable growth this year, with its value surging approximately 90% since the start of the year. This impressive ascent outpaces the $NASDAQ 100 Index(.NDX.US$'s more modest 11% increase during the same period. The broader semiconductor sector has also performed well, climbing roughly 34% year to date, yet Nvidia's exceptional returns stand out. As earnings announcement approaches, the question arises: can Nvidia maintain its outstanding performance?
Here are key expectations to watch:
Why Nvidia Seems Poised to Beat Wall Street's Expectations
• Nvidia appears likely to surpass Wall Street's expectations primarily due to the management's confidence in the company's data center business. The executive team has expressed clear visibility into the near-term sales within this segment, thanks to a substantial backlog of orders driven by high demand for Nvidia's AI-focused data center chips and products. While there may be less certainty regarding demand for other business segments, this is less concerning since the data center is Nvidia's primary market and a key driver of its overall results. The management's insight into upcoming sales gives them a solid basis for setting fiscal Q1 guidance, which they likely believe the company will outperform. Historically, Wall Street analysts have often underestimated Nvidia's growth potential, and it is anticipated that this trend will persist.
• Nvidia's forthcoming financial report, including the fiscal Q2 guidance, is anticipated to surpass analyst expectations partly because its major customers have been increasing their AI investments, as seen in their recent quarterly reports. Notably, companies like $Meta Platforms(META.US$ (Facebook's parent company), $Alphabet-A(GOOGL.US$, and $Microsoft(MSFT.US$ are significantly boosting their spending on AI initiatives, which bodes well for Nvidia. For example, Meta has adjusted its projected full-year 2024 capital expenditures to $35 million to $40 million, an increase from the previously estimated $30 million to $37 million, attributing this rise to accelerated investments in AI infrastructure, as stated by CFO Susan Li during the Q1 earnings call.
What History Tells
Over the previous four earnings reports, Nvidia has consistently surpassed projections, leading investors to anticipate the continuation of this pattern. Despite advancements from rivals such as $Advanced Micro Devices(AMD.US$ and $Intel(INTC.US$, Nvidia maintains a significant advantage in the graphics processing unit (GPU) market, securing roughly 80% of the worldwide market share. These chips are favored for artificial intelligence applications, reinforcing Nvidia's dominant position.
NVDA has beat consensus estimates for 18 of the past 20 quarters.
Key Things to Watch
• Nvidia's data center operations remain at the core of its business focus, with supply limitations being the primary bottleneck for its AI chip segment. There's keen interest in updates regarding the pace at which Nvidia's manufacturing partners are scaling up to meet the robust demand for its AI GPUs.
• The AI market's swift growth is vital to the company's future worth, yet there are uncertainties about this sector. Questions linger about the rate of data center investment in 2024 and onwards. Cloud providers plan to increase AI investment beyond initial projections, and it's expected that a significant portion of this expenditure will benefit Nvidia. Additionally, there is curiosity about capital spending outside of the largest cloud companies, as investment by enterprises in software, financial services, healthcare, and similar industries also seems significant.
• How large is the market for AI accelerators? Advanced Micro Devices (AMD) has impressively raised its projection for the industry's total addressable market in 2027 to a remarkable $400 billion, a significant leap from the earlier estimate of $150 billion. While this expanded market valuation accounts for a range of chip types in addition to GPUs, it nevertheless indicates a considerable expansion in the GPU sector, where Nvidia maintains its leading position in the AI GPU arena.
Source: Investopedia, QUARTZ, MorningStar, YahooFinance, tastylive, The Motley Fool
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Loki(the real one) : Who is the time traveler ?
intuitive Jackal_354 : it's already been leaked, they'll beat big again with strong forward guidance on the new chip
OptionsKing : 2025????
103985361 : 2024 u
talent_god : That's right, the 2025 fiscal year is calculated starting April 2024