Nvidia (NVDA) will release its fiscal Q1 2025 earnings this Wednesday, May 22, after the closing bell rings. It is bound to be the most important event for the markets this week, even as we have a flurry of earnings reports and Fed speakers also lined up.
Incidentally, it was after its fiscal Q1 2024 earnings report last year that Nvidia joined the ranks of $1 trillion companies. That quarterly report was among the most spectacular earnings and guidance beats that we have ever seen for any company of Nvidia's size.
The stock hasn’t looked back since, and despite a few brief sell-offs, it is still among the top 5 S&P 500 index ($SPX) gainers of 2024, with YTD gains of nearly 89%.
NVDA stock tends to be quite volatile after its earnings reports, and many traders use option strategies around the earnings date. As Nvidia prepares to report its quarterly earnings this week, let's explore what Wall Street expects from the Jensen Huang-led company, and whether the stock can rise above $1,000 after earnings.
Nvidia Fiscal Q1 Earnings Expectations
Analysts expect Nvidia to report revenues of $24.5 billion in the quarter that ended in April. The estimates imply YoY growth of 241%, which was preceded by 265% YoY growth in the previous quarter.
During the previous earnings call, Nvidia forecasted fiscal Q1 revenues to be $24 billion at the midpoint. The company has beaten its guidance, as well as analysts’ estimates, hands-down over the last few quarters amid soaring demand for its artificial intelligence (AI) chips.
Analysts' estimates call for earnings per share (EPS) of $5.13 in the quarter, which is 482% higher than the corresponding quarter last year.
Key Metrics to Watch in NVDA’s Q1 Earnings
Nvidia’s revenues have reached a higher base after rising by triple digits in the previous three quarters. The pace of growth is expected to moderate in the coming quarters, with analysts modeling a 98% YoY rise in sales in the fiscal second quarter. The growth is projected to fall even further subsequently, and according to consensus estimates, Nvidia is expected to post a 25.7% rise in revenues in the next fiscal year.
In March, Nvidia unveiled its new Blackwell chip, and a section of the market expects its revenue growth to slow down as it transitions to this new chip that will be publicly available only later this year. However, Morgan Stanley does not see any slowdown in Nvidia’s sales, even as it transitions from H100 chips to Blackwell.
As has been the case for the last few quarters, Nvidia’s revenue guidance and management’s commentary on the demand environment will attract a lot of attention. Bank of America expects the company’s fiscal Q2 guidance to imply a sequential revenue growth of single digits. It also expects Nvidia's gross margins to fall to a "more normalized" range of 75%-76% in the fiscal second quarter.
On a positive note, though, Big Tech companies - including Meta Platforms (META), Alphabet (GOOG), Amazon (AMZN), and Tesla (TSLA) \- are ramping up their capex toward AI, which would suggest higher spending on Nvidia’s chips, among others.
Nvidia Stock Price Forecast
Analysts have been raising Nvidia’s target price ahead of its fiscal Q1 earnings. Jefferies, for instance, raised its target price by $1,200 from $780, while HSBC raised it from $1,050 to $1,350.
Even Bank of America, which is circumspect about the company’s growth tapering down, has a “buy” rating with a $1,100 target price on Nvidia.
Nvidia’s mean target price of $990.51 is 7.1% higher than last week’s closing prices. Amid the spectacular price action over the last year, Nvidia has often traded above its consensus target prices, and analysts have tried to play catch-up following every earnings report by raising their target prices.
Can NVDA Stock Rise Above $1,000?
Currently, NVDA’s mean target price is only a tad short of $1,000. Looking at the market’s reaction to Nvidia’s previous few earnings calls, it won’t be surprising if the stock rises above $1,000 following this week's event.
Nvidia trades at a next 12-month (NTM) price-to-earnings (PE) multiple of 36.6x, which isn't particularly mouthwatering, but isn't exorbitant either, considering the kind of top-line and bottom-line growth that the company brings to the table.
With global AI spending expected to increase significantly over the next few years, high-powered chips like the ones that Nvidia produces will be in high demand. The risk, meanwhile, comes from supply, as chipmakers like Advanced Micro Devices (AMD) and Intel (INTC), as well as Big Tech companies like Microsoft (MSFT), are working on their own AI chips.
For now, though, Nvidia has got the better of its competition, and if the company can sustain its advantage over rivals, it will continue to reap the benefits of the “AI boom.”
On the date of publication, Mohit Oberoi had a position in: NVDA , INTC , MSFT , META , GOOG , TSLA . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
