Nvidia (NASDAQ:NVDA) is set to report its fiscal second-quarter earnings for 2025, with investors closely watching the company’s performance. Nvidia has been a dominant player in the tech industry, delivering strong returns for investors. However, with its stock price soaring nearly 150% year-to-date, questions are emerging about whether the stock has risen too quickly ahead of its earnings release.
Nvidia’s Impressive Performance
Nvidia has consistently been the top performer in the S&P 500 Index ($SPX) for the past two years. The company’s stock has experienced a remarkable surge, particularly in the first half of 2024. Nevertheless, the stock has traded sideways in recent months, a contrast to the volatile price movements observed in previous years. While Nvidia briefly dipped below $100 earlier this month, pushing it into bear market territory, it quickly rebounded, reclaiming its $3 trillion market cap. This recovery is fueled by market optimism ahead of Nvidia’s upcoming earnings report.
Preview of Nvidia’s Q2 Earnings
Nvidia’s first-quarter earnings were exceptional, surpassing both revenue and profit expectations. This resulted in a significant stock price surge, adding $200 billion to its market cap in a single day. For the second quarter, Nvidia’s management has provided revenue guidance of $28 billion at the midpoint, exceeding the initial analyst estimate of $26.7 billion.
Currently, analysts project Nvidia to report revenues of $28.6 billion for the quarter ending July 28, 2024. Earnings per share (EPS) are anticipated at $0.59, signifying a 136% year-over-year increase. This points to continued robust growth, but the key question remains: Is this growth already reflected in the stock price?
Key Factors to Watch in Nvidia’s Q2 Earnings Report
Investors will closely scrutinize Nvidia’s revenue guidance for the current quarter. Analysts expect Nvidia’s revenues to surge by 74%, with growth projected to slow to 57% in the following quarter. While these are still impressive numbers, they are from a higher base, making sustained outperformance more challenging.
Another crucial aspect to monitor is Nvidia’s commentary on its upcoming , which are reportedly facing shipment delays. The success of these GPUs is vital for Nvidia to maintain its dominance in the AI chip market. Additionally, Nvidia may address the antitrust probe initiated by the U.S. Department of Justice regarding its dominance in the AI chip market. The company’s business in China is also under scrutiny, as U.S. export restrictions have impacted sales of Nvidia’s high-end AI chips in the region.
Analyst Sentiment and NVDA Stock Forecast
Nvidia holds a consensus “Strong Buy” rating from 39 analysts, with a mean target price of $141.65, approximately 13.7% above current levels. Some analysts, such as those from KeyBanc and Goldman Sachs, anticipate Nvidia to exceed earnings expectations and provide optimistic guidance for future quarters. The Street-high target price of $200 suggests a potential 60% upside, reflecting continued bullish sentiment among analysts.
Is Nvidia Stock a Buy Ahead of Earnings?
The broader tech industry, particularly hyperscalers like Meta Platforms (NASDAQ:META), remains committed to significant AI investments. This bodes well for Nvidia, considering its near-monopoly in the AI chip market. However, the recent sharp rally from the August lows means the margin of safety for new investors has decreased.
While is poised to report strong earnings, the stock may not have as much room to rise after earnings as it did in previous quarters. Investors should weigh the potential upside against the current lofty expectations.
In conclusion, Nvidia’s second-quarter earnings report will be a pivotal event, not only for the company but also for the broader tech sector. While the stock remains a strong growth name, the current valuation warrants cautious optimism.