NVIDIA (NVDA) EARNINGS PRIMER: Earnings due Wednesday, 28th May, at 21:20BST/16:20EDT

Analysis details (15:00)

NVIDIA (NVDA) EPS (exp. 0.92), Revenue (exp. 43.10bln), Next Qtr. EPS (exp. 1.01), Next Qtr. Rev. (exp. 46.38bln), Current FY EPS (exp. 4.36), Current FY Rev. (exp. 199.19bln), Next FY EPS (exp. 5.6), Next FY Rev. (exp. 246.68bln)

SUMMARY: 

• Looking ahead to the earnings, while obvious attention will be on the quarterly figures and guidance, participants will be cognizant of what is said about China-US relations, chip bans, and the new China chip. On top of this, NVDA investors will be looking for definitive answers on how much US chip curbs on China will cost the Co., even as a pullback in other regulations is expected to open up new markets.

EXPECTATIONS:

• Q1 EPS is expected at USD 0.92 with revenue printing at USD 43.10bln.


• Looking at the breakdown, Data Centre is seen at USD 39.07bln, Gaming 2.81bln, Automotive 595mln, Professional Visualization 500mln, and OEM and other 120mln.


• Regarding some other key metrics, the gross profit margin is expected at 71% and operating expense at 3.6bln.


• In terms of forward guidance, the next quarter's (Q2) revenue is seen at USD 46.59bln, with EPS of USD 1.01.

RECENT COMMENTARY: 

• Since China/US agreed to lower tariffs on each other, CEO Huang warned of "tremendous loss" as export controls limit US access to China's market. In separate comments, Huang said the US tightening of chip export controls has a significant impact on Cos. business, and it will resolutely provide services to the Chinese market.


• Numerically, Huang expects USD 5.5bln in charges in Q1 FY26 related to H20 products as the US informed the co. it requires a licence to export to China.

DESK VIEWS:

KeyBanc:

• Expects the tech-behemoth to report a more modest upside to Q1 results and Q2 (July) guidance due to the headwinds associated with the AI China chip ban and continued supply constraints associated with GB200 NVL72.


• However, KeyBanc does believe that Nvidia plans to ramp up another China-compliant GPU that does not use HBM, which should partially offset the impact of this ban. NVDA is still targeting 30k GB200 racks for the year, but KeyBanc is increasingly worried about the ability to achieve this.


• As a result, KeyBanc is fine-tuning its near-term estimates, which previously had already reflected the impact of the AI China ban and is trimming its H2 ʼ26 estimates to reflect continued supply constraints related to GB200 production.

Piper Sandler:

• Believes that Nvidia’s April quarter is poised for a miss in revenues largely from macro uncertainty and from the H20 ban.


• Adds that the new re-spun China chip will likely be commercialized in the late part of the July quarter which could also impact July's guide.


• Nonetheless, Piper advises investors to weather the uncertainty and stay long the stock as this is likely largely the last wave of negative news for NVDA this year.

Stifel:

• Expects largely inline results and outlook despite the negative top-line impact related to recently disclosed H20 restrictions.


• Stifel's supply chain discussions continue to point to significant acceleration into H2 with the recent news regarding NVDA's expanding footprint in the UAE and Saudi Arabia, which are supported by US policy shifts, incremental to its broader supply chain conversations.


• Stifel expects the near-term investor debate to remain centered on: (1) hyperscaler demand and sustainability of infrastructure investment, (2) potential incremental impacts related to China export restrictions, and (3) potential margin pressure on early GB200/300 ramps.

OPTIONS:

• Overall earnings estimates have been revised higher since Cos. last earnings release.


• Option Traders are pricing in a 7.9% move and the stock has averaged a 7.3% move in recent quarters.


• On Monday, May 12th, 2025 there was some notable buying of 75,245 contracts of the USD 120.00 call expiring on Friday, July 18, 2025.

CURRENT BROKER RECOMMENDATIONS:

• Strong Buy: 22.


• Buy: 34.


• Hold: 7.


• Sell: 1.

PRICING:

• Current share price: 131.29


• Median share price target: 168.00

INDEX WEIGHT:

• 11.33% NDX weight.


• 5.98% SPX weight


• 1.96% Dow weight


• Sector/Industry: Information Technology/Semiconductors & Semiconductor Equipment.

27 May 2025 - 15:00- EquitiesResearch Sheet- Source: Newsquawk