NVDA Stock Rises Ahead Of AI Leader's Major Report

Topline

Artificial intelligence titan Nvidia will take center stage Wednesday afternoon when the company shares financial results from its quarter ending last month, and though analysts expect record-setting sales amid the AI boom, Nvidia is likely to report an unusually weak bottom line as Washington regulations on the company’s China dealings take hold.

Nvidia CEO Jensen Huang, the world’s 11th-richest person, has come a long way from bussing tables.

AFP via Getty Images

Key Facts

Nvidia will post earnings for the three-month period ending April 27 at approximately 4:20 p.m. EDT, with a conference call with its CEO Jensen Huang to follow at 5 p.m., livestreamed on the company website here.

Wall Street expects the company to report $43.3 billion in revenue, according to consensus analyst estimates compiled by FactSet.

That would equate to year-over-year top line growth of a robust 66%, smashing the $39.3 billion sales record set the prior quarter.

But bottom line growth is likely to be far more modest, as forecasts call for $0.73 diluted earnings per share ($18.2 net income), equating to annual EPS increase of 20%.

That’s a far cry from the more than 70% year-over-year earnings expansion Nvidia reported in each of the prior seven quarters.

So why the ebbing growth as the global generative AI push remains in full force? It largely traces to the $5.5 billion charge the company said in April it would take this quarter after the Trump administration curbed the company’s ability to export its H20 AI chips to China, which has a $50 billion market for Nvidia’s chips, according to Rosenblatt analysts.

Nvidia Stock Rises Ahead Of Earnings

Shares of Nvidia climbed 1% by mid afternoon to about $137 per share, pacing toward their highest close since Feb. 20. Major indexes were flat ahead of Nvidia earnings, an event which often catalyzes broader moves. There needs to be a “positive earnings surprise” from Nvidia for the market to “squeeze higher,” according to Fabio Bassi, JPMorgan’s head of global cross asset strategy. Nvidia’s earnings come as the broader equity market stages a massive comeback from its tariff-driven slide this spring, as the S&P 500 is up 6% in May, heading toward its best monthly gain since 2023.

Big Number

58%. That’s the gross margin Bank of America analysts expect Nvidia to report Wednesday, which would be its weakest gross margin since 2022. Bank of America expects margins to recover to nearly 75% by year’s end.

Key Background

Nvidia is the unquestioned market leader in designing the semiconductor technology needed to train and power generative AI applications ranging from OpenAI’s ChatGPT to Tesla full self-driving. The pervasiveness of Nvidia’s graphics processing units, or GPUs, in the AI gold rush – as Nvidia enjoys a whopping 75% share in this burgeoning AI accelerator market – led Nvidia to become one of the world’s most valuable companies, Nvidia’s $3.3 trillion market capitalization trails only Microsoft’s $3.4 trillion market cap. Since the November 2022 release of ChatGPT sparked a spike in interest in AI’s ability to drive corporate growth, Nvidia stock has blossomed. Shares of the Silicon Valley firm are up 700% during that timeframe, outperforming the S&P benchmark by a magnitude of 14.

Surprising Fact

Now worth more than Berkshire Hathaway, Walmart, JPMorgan Chase and Coca-Cola, combined, Nvidia has quite the humble origins, tracing its founding to a 1993 meeting between Huang and his two cofounders at a Denny’s diner.

Forbes Valuation

Huang, the company’s only-ever CEO, has come a long way since his first job as a Denny’s busboy, as he is the 11th-richest person in the world thanks to his $119 billion fortune, according to Forbes’ latest calculations.

NVDA Stock Rises Ahead Of AI Leader’s Major Report