As Nvidia (NVDA) readies itself to unveil its fiscal Q1 2025 earnings post-bell on May 22, investors are at the edge of their seats. This pivotal event promises to dominate the financial landscape this week, amidst a whirlwind of earnings releases and Federal Reserve speaker engagements.
A year back, following its fiscal Q1 2024 earnings report, Nvidia ascended to the echelons of $1 trillion market cap companies. That particular quarterly disclosure stood out as one of the most remarkable showcases of earnings and guidance beats for a company comparable in size. Since then, despite minor setbacks, Nvidia has maintained its meteoric rise, firmly securing a position among the top 5 gainers in the S&P 500 index for 2024, with Year-to-Date gains hovering near 89%.
Anticipation looms as NVDA stock historically displays volatility post-earnings. Numerous traders strategically employ options techniques around this key period. Consequently, as Nvidia stands on the cusp of another earnings reveal, Wall Street’s projections for the Jensen Huang-helmed powerhouse and the possibility of breaching the $1,000 threshold are under scrutiny.
Insights into Nvidia’s Fiscal Q1 Earnings
Analysts are eying Nvidia to post revenues of $24.5 billion for the quarter concluding in April. This figure denotes a staggering 241% Year-over-Year (YoY) surge, following up on the preceding quarter’s 265% YoY growth.
During the last earnings call, Nvidia outlined a midpoint revenue projection of $24 billion for the fiscal Q1. Over the recent quarters, the corporation has consistently surpassed both its own forecasts and analyst estimates, driven by soaring demand for its artificial intelligence (AI) chips.
Projections by analysts foresee earnings per share (EPS) of $5.13 for the quarter, marking a remarkable 482% surge compared to the correlating quarter of the previous year.
Crucial Metrics to Monitor in NVDA’s Q1 Earnings
Nvidia’s revenue trajectory has elevated significantly after experiencing triple-digit growth across the preceding three quarters. Analysts anticipate a moderation in this growth pace in the upcoming quarters, predicting a 98% YoY sales uptick in the fiscal second quarter. Subsequent forecasts suggest a further decline, with consensus estimates hinting at a 25.7% revenue rise in the ensuing fiscal year.
Amid speculation around Nvidia’s transition to the new Blackwell chip unveiled in March, some market factions foresee a slowdown in revenue growth. Nevertheless, Morgan Stanley remains optimistic about sustained sales momentum during this transition from H100 chips to Blackwell.
Going forward, investor attention will gravitate towards Nvidia’s revenue guidance and the management’s commentary on demand. Bank of America is bracing for a single-digit sequential revenue growth implication in Nvidia’s fiscal Q2 guidance. Additionally, a decline in gross margins to a ‘more normalized’ 75%-76% range for the fiscal second quarter is also on the horizon.
In a silver lining, major Tech entities like Meta Platforms (META), Alphabet (GOOG), Amazon (AMZN), and Tesla (TSLA) are amplifying their capital expenditures for AI, pointing towards enlarged investments in Nvidia chips and related tech.
Projections on Nvidia Stock Price Trajectory
With Nvidia’s fiscal Q1 earnings imminent, analysts are revising their target prices upwards. Noteworthy among these adjustments is Jefferies, which lifted its target from $780 to $1,200, while HSBC upped its forecast from $1,050 to $1,350.
Even amid cautious sentiments regarding growth trajectory softening, Bank of America maintains a ‘buy’ rating, with a $1,100 target price on Nvidia.
The mean target price for Nvidia currently stands at $990.51, reflecting a 7.1% increase from last week’s closing prices. Throughout the past year’s remarkable market performance, Nvidia frequently exceeded analysts’ consensus target prices, prompting continual target price adjustments post-earnings disclosures.
Potential for NVDA Stock to Surpass $1,000
Presently, Nvidia’s mean target price flirts alluringly close to $1,000. Drawing insights from previous market reactions following Nvidia’s earnings announcements, witnessing the stock surge beyond $1,000 post this week’s event won’t be entirely unexpected.
Trading at a next 12-month (NTM) Price-to-Earnings (PE) multiple of 36.6x signifies a valuation that is neither tantalizingly cheap nor extravagantly high. This valuation, when juxtaposed against Nvidia’s exceptional top and bottom-line growth track record, paints a compelling picture of the company’s potential.
Fueled by projections of a substantial uptick in global AI expenditures in the forthcoming years, the demand for high-performance chips akin to Nvidia’s offerings is slated to amplify. Conversely, competitive risks loom in the form of potential supply challenges, as industry players like Advanced Micro Devices (AMD) and Intel (INTC), along with Tech giants such as Microsoft (MSFT), are actively developing their AI chips.
For the present moment, Nvidia has outpaced its competitors, and if it can uphold its competitive edge, the company is poised to reap the rewards of the ongoing ‘AI boom’.