Stocks

Headlines

NVIDIA's Earnings Preview: Strong Growth Amid Risks

NVIDIA Corporation (NVDA) anticipates a remarkable revenue surge of 64% YoY. However, EPS estimates fell slightly, indicating potential weaknesses. Professional investors should stay cautious as the stock holds a Zacks Rank 3 with a negative earnings surprise potential.

Date: 
AI Rating:   6

Analysis of NVIDIA Corporation’s Upcoming Earnings
NVIDIA Corporation is poised to release its first-quarter fiscal 2026 results on May 28, with an expected revenue of $43 billion indicating a strong growth trajectory of 64% year-over-year. This anticipated growth is reflected in the Zacks Consensus Estimate, which is slightly below at $42.71 billion.

Despite the impressive revenue projections, it’s crucial to note that the Consensus Estimate for earnings has slightly decreased, indicating a fall of one penny to 87 cents per share. Nevertheless, this still represents a year-over-year increase of approximately 42.6% from last year’s 61 cents per share. The company has consistently surpassed earnings estimates over the previous quarters, averaging a surprise of 7.9%.

The Datacenter business remains a significant contributor to NVIDIA’s revenue growth fueled by increasing demand for AI applications and cloud services, which is estimated to generate around $38.5 billion this quarter, showcasing growth of 70.6% year-over-year. The recovery within the Gaming and Professional Visualization segments is also promising, with expected revenues of $3.29 billion and $567.6 million respectively, reflecting growth rates of 24.4% and 32.9%.

The company’s Automotive segment displays robust growth potential, estimated at $551.7 million due to increasing interest in self-driving and AI technologies, which suggests a 67.7% year-over-year growth. However, with a forward price-to-sales (P/S) ratio significantly above the industry average, NVIDIA's current valuation remains high, making it susceptible to short-term fluctuations.

Despite NVIDIA's leading position in the semiconductor market and anticipated strong performance across various segments, the company holds a Zacks Rank of 3 with a negative Earnings ESP of -5.24%, indicating potential struggles in achieving earnings estimates. Thus, while NVIDIA appears well-positioned for long-term growth driven by advances in AI and datacenters, it remains essential for investors to monitor the upcoming earnings closely, considering both their strong growth prospects and inherent short-term risks.

Stocks:  NVDA AMD MU MRVL