Is a Beat Likely for NVIDIA (NVDA) This Earnings Season?
NVIDIA Corporation NVDA is likely to beat expectations when it reports second-quarter fiscal 2024 results after market close on Aug 23.
For the fiscal second quarter, the company expects revenues of $11 billion (+/-2%). The Zacks Consensus Estimate for the same is pegged at $11.02 billion, indicating a 64.4% increase from the year-ago reported figure.
The Zacks Consensus Estimate for quarterly earnings is pegged at $2.06 per share. This suggests year-over-year growth of 303.9% from the year-ago quarter’s earnings of 51 cents per share.
The company’s earnings beat the Zacks Consensus Estimate twice in the preceding four quarters while missing the same on two occasions, the average surprise being 0.3%.
Let’s see how things have shaped up before the announcement.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
Factors to Consider
NVIDIA’s second-quarter performance is likely to have benefited from the recovery across its Gaming and Professional Visualization end markets. The Gaming end market’s last two quarters’ results had shown signs of recovery as inventory with channel partners reached normal levels. The company also registered strong demand across most regions for its gaming products.
Revenues from the Gaming end market increased 22% sequentially in the last reported quarter. NVIDIA’s Professional Visualization segment performance also reflected recovery, with revenues increasing 31% sequentially. We believe that the trend is likely to have continued in the second quarter for both end markets. Our second-quarter revenue estimate for Gaming and Professional Visualization end markets are pegged at $2.26 billion and $298.6 million, respectively.
Moreover, the continued strength of its Datacenter business on the growing adoption of cloud-based solutions amid the growing hybrid working trend is expected to have boosted NVDA’s second-quarter revenues. An increase in Hyperscale demand and growing adoption in the inference market are likely to have been tailwinds in the to-be-reported quarter.
Additionally, the Datacenter end-market business is likely to have benefited from the growing demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures. The strong demand for its chips from large cloud service and consumer internet companies is anticipated to have aided the segment’s top-line growth in the to-be-reported quarter. Our second-quarter revenue estimate for Datacenter end market is pegged at $8.02 billion.
Further, the company’s Automotive segment showed an improvement in trends in six of the last eight quarters. The positive trend is likely to have continued in the fiscal second quarter, mainly due to increasing investments in self-driving and AI cockpit solutions. Our second-quarter revenue estimate for Automotive end market is pegged at $308.2 million.
However, we opine that ongoing macroeconomic headwinds, like high inflation and interest rates, are likely to have continued to hurt the sales of NVIDIA’s desktop workstation GPUs in the second quarter.
Earnings Whispers
Our proven model predicts an earnings beat for NVDA this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($2.11 per share) and the Zacks Consensus Estimate ($2.06 per share), is +2.39%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: NVIDIA currently sports a Zacks Rank #1.
Other Stocks With the Favorable Combination
Per our model, Workday WDAY, PagSeguro Digital PAGS and Science Applications International SAIC also have the right combination of elements to post an earnings beat in their upcoming releases.
Workday sports a Zacks Rank #1 and has an Earnings ESP of +2.01%. The company is scheduled to report second-quarter fiscal 2024 results on Aug 24. Its earnings beat the Zacks Consensus Estimate in the preceding four quarters, with the average surprise being 13.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Workday’s second-quarter earnings stands at $1.25 per share, 50.6% higher than the year-ago quarter. It is estimated to report revenues of $1.77 billion, which suggests an increase of approximately 15.5% from the year-ago quarter.
PagSeguro carries a Zacks Rank #2 and has an Earnings ESP of +6.93%. The company is anticipated to report second-quarter 2023 results on Aug 24. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 36.7%.
The Zacks Consensus Estimate for PAGS’ second-quarter earnings is pegged at 25 cents per share, indicating a year-over-year decline of 46.8%. The consensus mark for revenues stands at $689.4 million, suggesting a year-over-year decrease of 13.2%.
Science Applications is anticipated to report second-quarter fiscal 2024 results on Sep 7. The company has a Zacks Rank #3 and an Earnings ESP of +5.00% at present. Science Applications’ earnings beat the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 14.5%.
The Zacks Consensus Estimate for SAIC’s second-quarter earnings is pegged at $1.60 per share, suggesting a decline of 8.6% from the year-ago quarter’s earnings of $1.75. Science Applications’ quarterly revenues are estimated to decrease 7.6% year over year to $1.69 billion.
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