What Can We Expect from NVIDIA’s Fiscal 1Q17 Earnings?
What Surprise Could NVDIA's Fiscal 1Q17 Earnings Bring?
What surprises might March 2016 bring?
Intel (INTC), Qualcomm (QCOM), Micron Technology (MU), and Advanced Micro Devices (AMD) released their earnings for the March 2016 quarter. While Micron missed analysts’ estimates and reported its first quarterly loss in three years, the other three beat estimates. Now semiconductor giant NVIDIA (NVDA) is due to post its fiscal 1Q17 results in the first week of May 2016. NVIDIA is known for flowing against the current and being in the right place at the right time—or rather, all of the right places at the right time. It has a presence in the gaming, automotive, and data center sectors. In this series, we’ll see how the quarter went for NVIDIA and what to expect from its upcoming fiscal 1Q17 earnings release.
Earnings per share
Analysts expect NVIDIA to post EPS (earnings per share) of $0.31 in fiscal 1Q17. NVIDIA missed analysts’ EPS estimates in two of the past four quarters. The company missed the EPS estimate in fiscal 1Q16 and is likely to miss it in fiscal 1Q17 as well. However, this earnings season has brought many surprises, with Intel and Qualcomm beating EPS estimates. NVIDIA might meet or beat analysts’ EPS estimate.
Revenue
After reporting record revenues of $1.4 billion in fiscal 4Q16, NVIDIA expects revenues to fall by 10% QoQ (quarter-over-quarter) to around $1.3 billion in fiscal 1Q17. Analysts expect the company to report revenue of $1.2 billion. On a YoY (year-over-year) basis, the $1.3 billion revenue estimate marks a 10% growth from the fiscal 1Q16 revenue. If there is any revenue surprise, it will have been driven by the launch of Facebook’s (FB) Oculus Rift VR (virtual reality) headset on March 28, 2016.
The first two quarters are generally slow for gaming, and NVIDIA earns more than 50% revenue from this market. Rival Advanced Micro Devices also witnessed declining sales of chips designed for gaming consoles. However, NVIDIA’s data center and automotive segments are likely to post strong growth in fiscal 1Q17.
In the next part of this series, we’ll look at the profit margins and expenses likely to be reported by NVIDIA in fiscal 1Q17. The PowerShares QQQ ETF (QQQ) invests in the technology sector and has a 0.38% exposure to NVDA, a 5.4% exposure to FB, and a 2.9% exposure to INTC.
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