4 Things to Know Before Nvidia Earnings

All eyes are on Nvidia (NVDA), the chipmaking and emerging software giant that reports much anticipated fiscal first quarter earnings after the closing bell Wednesday.

And it’s no wonder why: Nvidia topped analyst expectations for per-share earnings for three years running.

Nvidia shares were up 0.41% in early trading Wednesday. The stock slowed its runup in recent days; shares have more than doubled over the past year to Tuesday’s close near $220.61. But analysts are still very bullish. The majority maintain the equivalent of Strong Buy rating on the stock.

Erin Gibbs, Chief Equity Strategist at SlateStone Wealth, said in an interview with Diane King Hall Tuesday that the options market is indicating Nvidia earnings will top expectations “as they usually do,” but any sign of weakness for this “mammoth in the AI ecosystem,” could pressure shares.

Gibbs added, “The AI trade is going to continue for a decade, but do we see these stocks continue to rise at the same rate? Or do they start to slow? … They are really stretched when it comes to the … results we are expecting of them. It’s reasonable for the market to be able to pull back and say, ‘I have put enough money into them for now.’”

Four things to know:

• What Nvidia 1Q earnings may look like: The company is expected to report 1Q earnings of $1.77 per share on revenue of $78.75 billion, a 78.7% increase from $44.06 billion a year ago, according to Zacks. The company said in February that it expected 1Q revenue of between $76.44 billion and $79.56 billion, and gross profit margin between 74.62% and 75.37%.
• What could be a catalyst for shares: Any word on potential China customer purchases of Nvidia’s advanced H200 AI chips. Investors and traders alike were hoping some kind of agreement would emerge from the summit in China between President Xi Jinping and President Donald Trump.
• How to think about gross margins: In lengthy research explaining how AI is revolutionizing computing and infrastructure, analysts at William Blair noted that as chip companies seek to capture more value from customers by moving “up the tech stack,” they also have to drive better gross margins. Nvidia has been doing this over time partly due to pricing, according to analysts. Nvidia’s gross margin has rivaled averages for software players including Salesforce (CRM), Oracle (ORCL), Atlassian (TEAM), Cloudflare (NET), and Datadog (DDOG). And its gross margins have been well ahead of averages for cloud-related names including Intel Corp. (INTC), Advanced Micro Devices, Inc. (AMD), Qualcomm Inc. (QCOM), Micron Technology, Inc. (MU), and Texas Instruments Inc. (TXN) .
• What does it do: Nvidia operates through two segments. Its Compute & Networking segment provides data center accelerated computing and networking platforms and artificial intelligence solutions and software, and automotive platforms, solutions and software. The Graphics segment offers GPUs for gaming, PCs and enterprise workstation graphics.

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