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The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20.2%.
For the fiscal first quarter, the company expects revenues of $24 billion (+/-2%). The Zacks Consensus Estimate is pegged at $24.27 billion, which indicates a whopping 237% increase from the year-ago reported figure.
The Zacks Consensus Estimate for quarterly earnings has been revised upward by 3 cents to $5.52 per share over the past seven days. This suggests year-over-year growth of 406% from the year-ago quarter’s earnings of $1.09 per share.
NVIDIA has witnessed a remarkable run, showcasing a staggering 91.8% year-to-date surge in its stock price, pushing the company to the forefront of technology and innovation. NVIDIA also achieved a massive milestone in March 2024 by joining the exclusive club of companies with more than $2 trillion market capitalization.
The surge reflects investors' confidence in NVIDIA's strategic positioning, robust financial performance and pivotal role in shaping transformative technologies like artificial intelligence (AI), gaming and data center solutions. With the company gearing up to report its first-quarter earnings, let’s evaluate why it is the right time to buy this semiconductor stock.
In recent quarters, NVIDIA has consistently delivered impressive financial results, surpassing revenue and earnings expectations. In the last reported results for the fourth quarter of fiscal 2024, the company’s top and bottom lines increased 265% and 486%, respectively, on a year-over-year basis. Its revenue growth has been fueled by robust demand for chips needed for generative AI model development.
NVIDIA dominates the market for generative AI chips. The meteoric rise of OpenAI’s ChatGPT and its adoption among enterprises have already proven generative AI technology’s usefulness across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.
The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $967.6 billion by 2032, according to a new report by Fortune Business Insights. The market is expected to expand at a CAGR of 39.6% from 2024 to 2032.
However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will be required to upgrade their existing network infrastructure.
NVIDIA’s A100, H100 and B100 AI chips, which are used to build and run AI applications, are the top choice for enterprises. The company’s GPUs are already being applied in AI models. This is expanding NVDA’s footprint in untapped markets like automotive, healthcare and manufacturing.
We believe that the generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips, thereby boosting the company’s top and bottom lines.
Earnings Whispers
Our proven model predicts an earnings beat for NVIDIA this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($5.68 per share) and the Zacks Consensus Estimate ($5.52 per share), is +2.90%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: NVIDIA sports a Zacks Rank #1.
Final Thoughts
With the ongoing digitization trend and the increasing adoption of AI technologies across various industries, NVIDIA is well-positioned to maintain its strong financial performance in the to-be-reported quarter as well as quarters ahead.
NVIDIA remains a market darling, and razor-sharp investors should encash on its likely long-term upward movement. The company’s expected earnings growth rate for the current and next fiscal year is 86% and 16%, respectively. The long-term expected earnings growth rate is currently pegged at 30.9%, significantly higher than the Zacks Semiconductor – General industry’s 17.2%.
NVIDIA is also a cash-rich company, making it immune to market upheavals. The company’s cash and cash equivalents were $25.98 billion as of Jan 28, 2024, up from $18.28 billion on Oct 29, 2023.
Nonetheless, NVIDIA trades at a one-year forward P/S of 21.20X, a massive premium to the Semiconductor-General industry’s forward P/S multiple of 14.11X. Therefore, many would argue that the stock is a risky bet. However, we beg to differ due to its consistent financial performance and strong growth opportunities in various untapped markets like automotive, healthcare and manufacturing over the long term.
Additionally, NVIDIA has a Growth Score of B at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 and a Growth Score of A or B offer solid investment opportunities.
Therefore, considering the company’s impressive growth profile and attractive Zacks Style Score, we believe it is the right time to invest in the stock.
The Zacks Consensus Estimate for Zscaler’s fiscal 2024 earnings has been revised 2 cents upward to $2.73 per share in the past 60 days, which suggests year-over-year growth of 52.5%. The long-term estimated earnings growth rate for the stock stands at 28.1%. The ZS stock has plunged 17.8% YTD.
The Zacks Consensus Estimate for Salesforce’s fiscal 2025 earnings has been revised upward by 3 cents to $9.71 per share in the past 60 days, which calls for an increase of 18.1% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 17.4%. CRM shares have risen 9.1% YTD.
The consensus mark for Paycom’s 2024 earnings has been revised upward by 3 cents to $7.68 per share over the past 30 days, which indicates a marginal 0.9% decrease from 2023. It has a long-term earnings growth expectation of 10.4%. The PAYC stock has declined 14.2% in the YTD period.
Image: Bigstock
Should NVIDIA (NVDA) be in Your Portfolio Ahead of Q1 Earnings?
NVIDIA Corporation (NVDA - Free Report) is set to report first-quarter fiscal 2025 results on May 22.
The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20.2%.
For the fiscal first quarter, the company expects revenues of $24 billion (+/-2%). The Zacks Consensus Estimate is pegged at $24.27 billion, which indicates a whopping 237% increase from the year-ago reported figure.
The Zacks Consensus Estimate for quarterly earnings has been revised upward by 3 cents to $5.52 per share over the past seven days. This suggests year-over-year growth of 406% from the year-ago quarter’s earnings of $1.09 per share.
NVIDIA has witnessed a remarkable run, showcasing a staggering 91.8% year-to-date surge in its stock price, pushing the company to the forefront of technology and innovation. NVIDIA also achieved a massive milestone in March 2024 by joining the exclusive club of companies with more than $2 trillion market capitalization.
The surge reflects investors' confidence in NVIDIA's strategic positioning, robust financial performance and pivotal role in shaping transformative technologies like artificial intelligence (AI), gaming and data center solutions. With the company gearing up to report its first-quarter earnings, let’s evaluate why it is the right time to buy this semiconductor stock.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
GenAI Investments Aid NVIDIA’s Financials
In recent quarters, NVIDIA has consistently delivered impressive financial results, surpassing revenue and earnings expectations. In the last reported results for the fourth quarter of fiscal 2024, the company’s top and bottom lines increased 265% and 486%, respectively, on a year-over-year basis. Its revenue growth has been fueled by robust demand for chips needed for generative AI model development.
NVIDIA dominates the market for generative AI chips. The meteoric rise of OpenAI’s ChatGPT and its adoption among enterprises have already proven generative AI technology’s usefulness across multiple industries, including marketing, advertising, customer service, education, content creation, healthcare, automotive, energy & utilities and video game development.
The growing demand to modernize the workflow across industries is expected to drive the demand for generative AI applications. The global generative AI market size is anticipated to reach $967.6 billion by 2032, according to a new report by Fortune Business Insights. The market is expected to expand at a CAGR of 39.6% from 2024 to 2032.
However, generative AI requires vast knowledge to create content and needs huge computational power. As a result, enterprises looking to create generative AI-based applications will be required to upgrade their existing network infrastructure.
NVIDIA’s A100, H100 and B100 AI chips, which are used to build and run AI applications, are the top choice for enterprises. The company’s GPUs are already being applied in AI models. This is expanding NVDA’s footprint in untapped markets like automotive, healthcare and manufacturing.
We believe that the generative AI revolution is likely to create huge demand for its next-generation high computing powerful chips, thereby boosting the company’s top and bottom lines.
Earnings Whispers
Our proven model predicts an earnings beat for NVIDIA this earnings season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($5.68 per share) and the Zacks Consensus Estimate ($5.52 per share), is +2.90%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: NVIDIA sports a Zacks Rank #1.
Final Thoughts
With the ongoing digitization trend and the increasing adoption of AI technologies across various industries, NVIDIA is well-positioned to maintain its strong financial performance in the to-be-reported quarter as well as quarters ahead.
NVIDIA remains a market darling, and razor-sharp investors should encash on its likely long-term upward movement. The company’s expected earnings growth rate for the current and next fiscal year is 86% and 16%, respectively. The long-term expected earnings growth rate is currently pegged at 30.9%, significantly higher than the Zacks Semiconductor – General industry’s 17.2%.
NVIDIA is also a cash-rich company, making it immune to market upheavals. The company’s cash and cash equivalents were $25.98 billion as of Jan 28, 2024, up from $18.28 billion on Oct 29, 2023.
Nonetheless, NVIDIA trades at a one-year forward P/S of 21.20X, a massive premium to the Semiconductor-General industry’s forward P/S multiple of 14.11X. Therefore, many would argue that the stock is a risky bet. However, we beg to differ due to its consistent financial performance and strong growth opportunities in various untapped markets like automotive, healthcare and manufacturing over the long term.
Additionally, NVIDIA has a Growth Score of B at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 or 2 and a Growth Score of A or B offer solid investment opportunities.
Therefore, considering the company’s impressive growth profile and attractive Zacks Style Score, we believe it is the right time to invest in the stock.
Other Stocks to Consider
Some other top-ranked stocks in the broader technology sector are Zscaler (ZS - Free Report) , Salesforce (CRM - Free Report) and Paycom Software (PAYC - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Zscaler’s fiscal 2024 earnings has been revised 2 cents upward to $2.73 per share in the past 60 days, which suggests year-over-year growth of 52.5%. The long-term estimated earnings growth rate for the stock stands at 28.1%. The ZS stock has plunged 17.8% YTD.
The Zacks Consensus Estimate for Salesforce’s fiscal 2025 earnings has been revised upward by 3 cents to $9.71 per share in the past 60 days, which calls for an increase of 18.1% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 17.4%. CRM shares have risen 9.1% YTD.
The consensus mark for Paycom’s 2024 earnings has been revised upward by 3 cents to $7.68 per share over the past 30 days, which indicates a marginal 0.9% decrease from 2023. It has a long-term earnings growth expectation of 10.4%. The PAYC stock has declined 14.2% in the YTD period.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.