Nvidia Earnings Preview: Impact on AI Market and Retail Sector

Nvidia's upcoming earnings report is set to be pivotal, with analysts tightening EPS estimates and scrutinizing profit margins. Strong demand for AI chips may mitigate concerns. Costco also looks stable amid retail challenges. These shifts could notably influence stock prices in coming months.

Date: 24-05-2025

AI Rating: 5

Nvidia's Earnings Impact
Nvidia's earnings report is anticipated to be a significant event, with the company expected to report earnings of 85 cents per share on revenues of $42.6 billion, representing substantial year-over-year increases of +39.3% EPS and +63.7% revenue growth. However, it is noteworthy that the estimates have come under pressure, falling from 93 cents two months ago to the current projection of 85 cents. This downward revision indicates potential weakness in projections, highlighting the uncertainty surrounding Nvidia's profit margins as the company transitions to its new Blackwell GPU. Concerns arose regarding the efficiency of ramping up production for Blackwell after challenges in prior quarters with the Hopper units. While there are indications that demand is significantly outpacing previous periods, the continued scrutiny on profit margins may dampen investor sentiment.

Costco's Stability Amid Market Pressures
Costco is set to report earnings of $4.25 per share, reflecting a more modest growth expectation of +12.4% year-over-year on the EPS front, with revenue growth projected at +7.9%. Costco’s resilience in navigating tariff uncertainties sets it apart from other retailers, showcasing the company’s robust positioning. Moreover, the upward movement in earnings estimates hints at positive market sentiment as compared to last month’s figures. The loyalty of its high-income customer base could sustain its growth momentum, especially with increased membership income expected in the high single digits.

Sector-Wide Analysis
The report indicates that the retail sector is experiencing a mix of marginal pressures, with a noted increase of +11.6% in Q1 earnings across S&P 500 members but with only 74.3% beating EPS estimates. This performance falls below historical averages, signaling potential market headwinds. Additionally, strength in the tech sector appears to stabilize as indicated by tech estimates now indicating signs of recovery.

In summary, while Nvidia faces immediate hurdles through EPS and margin pressures, Costco presents itself as a stable unit in retail with excellent growth potential amidst broader sector volatility. The upcoming earnings reports from these companies are expected to heavily influence stock price movements within their respective segments.

Stocks: NVDA COST