Earnings Preview: What To Expect From Nvidia's Results

Microchip and Nvidia logo displayed on a phone screen are seen in this multiple exposure ... [+] illustration photo taken in Krakow, Poland on April 10, 2023. (Photo by Jakub Porzycki/NurPhoto via Getty Images)

Nvidia Inc. is scheduled to report earnings after Wednesday’s close. The stock hit a record high of $746.11/share in February 2024 and is currently trading near $682 in the premarket. The stock is prone to big moves after reporting earnings and can easily gap up if the numbers are strong. Conversely, if the numbers disappoint, the stock can easily gap down. To help you prepare, here is what the Street is expecting:

The company is expected to report a gain of $4.56/share on $20.24 billion in revenue. Meanwhile, the so-called Whisper number is a gain of $4.67/share. The Whisper number is the Street's unofficial view on earnings.

Nvidia price to earnings (P/E) ratio is 80, which is around 3.5x the S&P 500 and somewhat “normal” for big cap tech growth stocks. The company has managed to grow its earnings and revenue by triple digits in each of the past two quarters on a year-over-year basis. Looking forward, the company is expected to enjoy some wild growth over the next few years. On an annual basis, earnings are expected to grow from $3.34/share in 2023 to $11.45 in 2024, to $20.03 in 2025! That makes Nvidia one of the fastest growing mega cap stocks in the market! Elsewhere, the return on equity (ROE) is grown from the low 30’s a few quarters ago to over 84% in the most recent quarter! The company also has healthy cash flow of $4.02, making it an attractive candidate for some investors.

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Technically, the stock has performed very well recently and just hit a fresh record high. In the short-term, the stock is extended and due to pullback. The options market is pricing in a massive 11% move after the company reports earnings. Most growth stocks can gap up or down big after reporting earnings. It will be interesting to see how the stock reacts to earnings today.

NVIDIA DIA Corporation provides graphics, and compute and networking solutions in the United States, Taiwan, China, and internationally. The company's Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building 3D designs and virtual worlds. Its Compute & Networking segment provides Data Center platforms and systems for AI, HPC, and accelerated computing; Mellanox networking and interconnect solutions; automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions; cryptocurrency mining processors; Jetson for robotics and other embedded platforms; and NVIDIA AI Enterprise and other software. The company's products are used in gaming, professional visualization, datacenter, and automotive markets. NVIDIA Corporation sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, independent software vendors, Internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups, and other ecosystem participants. It has a strategic collaboration with Kroger KR Co. NVIDIA Corporation was incorporated in 1993 and is headquartered in Santa Clara, California.

From where I sit, the most important trait I look for during earnings season is how the market and a specific company reacts to the news. Remember, always keep your losses small and never argue with the tape.

Disclaimer: I have a position in NVDA and the stock has been featured in my FindLeadingStocks.com report.

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