What to expect from AI-heavyweight Nvidia’s Q1 earnings

Nvidia, Wall Street’s third-largest company by market capitalisation, is set to announce its first-quarter financial results after the closing bell on Wednesday. This event is expected to be a major market catalyst, testing whether the remarkable rally in AI-related stocks can be sustained.

Analysts predict earnings of $13.2 billion, equating to $5.62 per share, with projected quarterly revenue of $24.6 billion. Additionally, there is speculation about the potential for a $30 billion quarter by year’s end.

“Nvidia’s financial results (last quarter) have been stellar, with significant revenue growth driven by high demand for its AI chips. This robust financial health positions the company well for continued investment in innovation and market expansion,” said Justin Khoo, Senior Market Analyst APAC – VT Markets.

Khoo pointed out that Nvidia faces increasing competition from tech giants such as Intel, AMD, and custom AI chip developers such as Google and Amazon.
“These competitors are developing their own AI hardware solutions, which could erode Nvidia’s market share over time. Nvidia’s dependence on sectors like gaming and cryptocurrency, which are subject to significant market volatility, poses a risk,” the analyst added.

As per LSEG, the Silicon Valley-based chipmaker is expected to report year-over-year revenue growth in excess of 200% for a third straight quarter, with analysts projecting a fiscal first-quarter bump-up of 243% to $24.6 billion.

Over $21 billion of that is expected to come from Nvidia’s data center business, which includes all the advanced processors the company is selling to Google, Microsoft, Meta, Amazon, OpenAI and others, according to a CNBC report.

The Nvidia stock has risen 98% this year after more than tripling in 2023.

The stock settled 0.64% higher at $953.86 apiece at close on May 21 as investors awaited the AI chip leader’s earnings.

“Despite its strengths, Nvidia’s stock is currently expensive at $948. Prices of $720 and below are seen as good accumulation areas, with technical analysis indicating $690 as potential support,” Khoo said.