Nvidia's Upcoming Q3 Is Unlikely To Surprise You

seekingalpha11-20

I don't think Nvidia Corporation's upcoming Q3 FY2025 numbers will really surprise investors — demand is predictably outstripping supply, so I expect another profit and positive comments from ...

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Monkseal
·11-20
...bearish rating aged like milk... - it's just a nice way of saying you are wrong. Yet you still continue not to correct your position but mislead further. Beat size is expected to shrink, but demand outstripped supply is simply an economic rule you can't go against and being a leader will continue to raise its stock price until a worthy rival appears to split the market share.
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The growing use of generative AI, model training, and inferencing workloads ","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2462157665.USD":"ALLIANZ GLOBAL INCOME \"A\" (USD) INC","LU2458330169.SGD":"FRANKLIN SHARIAH TECHNOLOGY \"A\" (SGD) ACC","LU1116320901.HKD":"BGF SYSTEMATIC GLOBAL ENHANCED EQUITY YIELD \"A6\" (HKD) INC","LU2491050071.SGD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (SGDHDG) ACC","BK4549":"软银资本持仓","LU0265550946.USD":"BGF SYSTEMATIC GLOBAL ENHANCED EQUITY YIELD \"A5\" (USD) INC","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","LU1791710400.SGD":"Fidelity Global Demographics A-ACC-SGD","LU1983260115.SGD":"Janus Henderson Horizon Global Sustainable Equity A2 SGD-H","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","LU0964807845.USD":"ALLIANZ INCOME & GROWTH \"A\" (USD) INC","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","LU2357125470.USD":"BNP PARIBAS ENERGY TRANSITION \"CLASSIC RH\" (USDHDG) ACC","NVDA":"英伟达","LU1323610961.USD":"UBS (LUX) EQUITY SICAV - LONG TERM THEMES (USD) \"P\" (USD) ACC","LU2092627202.USD":"Blackrock ESG Multi-Asset A8 USD-H","LU2756315664.SGD":"ALLIANZ INCOME AND GROWTH \"AMI\" (SGDHDG) INC","LU1868836757.USD":"CT (LUX) I AMERICAN FUND \"2\" (USD) ACC","LU2236285917.USD":"ALLIANZ GLOBAL INCOME \"AMG\" (USD) INC","SG9999014567.USD":"UOB UNITED INCOME FOCUS TRUST FUND (USD) ACC","LU1935043023.USD":"MANULIFE GF GLOBAL MULTI-ASSET DIVERSIFIED INCOME \"AA\" (USD) INC A","LU0203201768.USD":"AB SICAV I - ALL MARKET INCOME PORTFOLIO \"AX\" (USD) INC","LU2505996681.GBP":"WELLINGTON MULTI-ASSET HIGH INCOME \"AM4H\" (GBPHDG) INC","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H","LU0345769128.USD":"NINETY ONE GSF GLOBAL EQUITY \"A\" (USD) ACC","LU0096364046.USD":"CT (LUX) I AMERICAN \"DU\" (USD) ACC","IE00B1BXHZ80.USD":"Legg Mason ClearBridge - US Appreciation A Acc USD","SGXZ23171101.USD":"NIKKO AM SHENTON GLOBAL OPPORTUNITIES (USD) ACC","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","LU0251132253.USD":"FIDELITY FUNDS  GLOBAL THEMATIC OPPORTUNITIES \"A\" (USD) ACC","LU2456880835.USD":"ALLIANZ GLOBAL INCOME \"AT\" (USD) ACC","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","LU0069063385.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (USD) ACC","BK4551":"寇图资本持仓"},"translate_title":"Nvidia即将发布的第三季度不太可能让您感到惊讶","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NVDA":1.1},"content_text":"I don't think Nvidia Corporation's upcoming Q3 FY2025 numbers will really surprise investors — demand is predictably outstripping supply, so I expect another profit and positive comments from management.Nvidia's strategic focus on AI and accelerated computing positions it for long-term growth, with significant contributions from generative AI and model training workloads.On the other hand, I think the “beat size” will continue to fall, which could lead to a mixed reaction from market participants.Nvidia's leadership in AI infrastructure and increased CAPEX from major tech firms suggest continued demand, but the stock price may face short-term pressure due to valuation premiums.NVDA stock is a “Hold”.BING-JHEN HONGIntro & ThesisI'd long been skeptical about how high Nvidia Corporation (NASDAQ:NVDA) stock could go - unfortunately for my coverage history (and fortunately for buyers of Nvidia stock) my bearish rating aged like milk, so I decided to reassess my stance in late August this year. The last time I covered NVDA I was previewing its earnings for Q2. I expressed my thoughts that the company's bottom line or revenue wouldn't be significantly impacted by the GB200 production delays that many were discussing back then. As time has shown, Nvidia managed to beat Q2 earnings and the stock continued to rise, albeit at a much more modest pace:Seeking Alpha, the author's coverage of NVDA stockBased on the indirect data we have today, I expect Nvidia Corporation (NVDA) is unlikely to be surprised by anything new - the company has significantly beaten consensus in recent quarters, although the extent of the beats has continued to decline. I expect Nvidia to beat the current consensus for the third quarter again without surprising investors with anything new - indirect data tells us that demand for Nvidia's GPUs is still outpacing supply, providing a solid foundation for future business expansion. I expect management to be positive again on the earnings call, stimulating the idea among market participants that growth isn't yet exhausted.In my opinion, however, there's a risk of a drawdown after the publication of the results. Most of the positive developments are already priced in, and the market could see a potentially weaker earnings beat as the beginning of the end of the upward cycle in the short term. This possibility certainly can't be ruled out.Why Do I Think So?First off, let me briefly overview the Q2 results, as my article came out before they were actually released.Nvidia has posted a stunning showing in its fiscal Q2 2025 report, generating record revenues of $30 billion - that's a 15% sequential increase and 122% growth over the previous year. The data center market was the largest contributor to this strong financial performance, which alone accounted for $26.3 billion (up 16% sequentially and 154% YoY). The growing use of generative AI, model training, and inferencing workloads drives the data center's growth. So naturally, the demand for Nvidia's Hopper and Blackwell GPU solutions, as well as its networking solutions, has played a critical role in this expansion.Gaming too experienced significant growth, posting revenues of $2.88 billion, 9% sequentially and 16% year-over-year. It primarily accounts for this increase in demand for RTX-powered PCs and laptops, which are increasingly being utilized for AI. At the same time, Nvidia's Automotive and Robotics business lines are becoming significant growth areas as the firm posted 37% year-over-year growth in vehicle revenue as the company applied its technology to autonomous vehicle development.The apps we all are used to use massive amounts of computational power, which Nvidia GPUs are necessary for. So NVDA's inference platform, which represented more than 40% of data center revenues, is particularly attractive to CSPs, consumer internet providers, and enterprises. That dependence is going to only increase as the next-generation AI engines use more and more compute power, setting Nvidia for long-term growth.On the other hand, we also saw sequentially reduced gross margins for Nvidia as new products and inventories for low-yielding Blackwell materials were increased. However, the company's operating cash flow saved the day (NVDA generated ~$14.5 billion in CFO for the quarter). The company used ~$7.4 billion for repurchases and dividends, authorizing an additional $50 billion for buybacks and thus showing the market the management's focus on shareholder value creation. Furthermore, the gross margin decline was well anticipated, allowing Nvidia to easily beat the consensus expectations for the quarter:Seeking Alpha, NVDAAfter Trump won the presidential chair, some people started to fear that the new administration's potential limits on US-China trade may limit Nvidia's top-line expansion. But I think it's not really a major threat to NVDA as it continued to limit its exposure to China - the revenue share in that region fell from 20.3% last year to 12.2% as of Q2 FY2025.NVDA's 10-Q [Q2 FY2025]Nvidia's strategic focus on AI and accelerated computing is a major advantage. The ecosystem and the availability of the company's CUDA software in all major cloud platforms appeal heavily to developers and businesses. The launch of the H200 platform, which offers 40% more memory bandwidth than its predecessor, also consolidates Nvidia's position as an AI infrastructure leader.Looking ahead, Nvidia's management projected ~$32.5 billion in revenue for Q3 FY2025, fueled by continued data center growth and increased demand for Blackwell products. Blackwell production will begin in Q4 and several billion dollars of revenue from this new architecture is anticipated, according to the company. Gross margins are expected to remain at mid-70% due to the continuing move towards new products.The problem is that the market is already pricing in sales growth to $33.1 billion, which is 1.84% above management's forecast. This appears to be a slight increase, but this optimism reduces the chances that the forecast will be significantly exceeded. Most likely, the trend of reducing the magnitude of positive surprises will continue in Q3 because in addition to the premium on revenue estimate, we see a premium on EPS forecast. According to Wall Street analysts, Nvidia should demonstrate an EPS growth rate that exceeds the revenue growth rate. This is thanks to its operating leverage, and I think it will be quite difficult for the company to achieve this, as gross margin stagnation is unlikely to go anywhere.Seeking Alpha, NVDASeeking Alpha, NVDABut why do I believe that there will still be another EPS/sales beating for Q3 (albeit not as strong as before due to higher market optimism)?I recommend revisiting the indirect data I mentioned at the start of the article. Fortunately, most of the major clients - large tech firms - reported their last quarter earnings at the end of October and the beginning of November. This allows us to assess demand by examining the trends in their cloud segments.Google Cloud's (GOOGL) (GOOG) revenue growth, for example, jumped to 35% year over year, while Microsoft Azure's (MSFT) growth - though slower - will likely continue to pick up speed as additional capacity becomes available. This means there's good demand for Nvidia products as these tech giants continue to invest in AI and cloud infrastructure, which rely heavily on Nvidia GPUs.In addition, the anticipated surge in capital spending on large cloud providers is a positive sign for Nvidia. Major companies such as Microsoft, Google, and Amazon (AMZN) all announced plans to add CAPEX as a way of scaling their AI and cloud solutions. The resulting increase in spending will likely drive demand for Nvidia GPUs, which are key components for AI and cloud applications.Goldman Sachs [proprietary source, November 2024]For all these reasons, Nvidia's leadership position in the market and continued growth in AI and cloud infrastructure indicate good prospects to surpass estimates for earnings per share. This would give the management more room to be positive during the upcoming earnings call.As Goldman Sachs analysts noted in their November note (proprietary source), the global AI infrastructure market also confirms Nvidia's ability to exceed expectations. SK Hynix and Samsung have seen a surge in revenues for their high-bandwidth memory (HBM) products, essential to AI workloads, which indicates the huge appetite for AI-related hardware. Advanced Micro Devices' (AMD) further rise in its forecast for its AI accelerator market and data center GPU revenue also underscores the growing market for AI infrastructure. This explosion in AI use cases across the range of businesses from auto to healthcare indicates that Nvidia's technology is in demand, laying the foundation for earnings surprises.So I do not think investors will be in for a big surprise when the Q3 results are published - Nvidia is set for another earnings beat. But again, with the market already giving a premium to management's guidance and the problems of stagnating margins not going away, I think the beat will be smaller than many expect. This could cause the stock to fall in the short term as it is pressured from the premium to its valuation.Morningstar Premium, NVDA [proprietary source]I have to say right away that I do not think NVDA is overvalued. If the growth forecasts really come true and the leading position doesn't lose relevance, then the current 49x in forward P/E ratio is well deserved. On the other hand, such high multiples usually lead to a certain vulnerability of the stock price as soon as the company shows even the slightest sign of weakness. What exactly that sign might be, aside from the actual earnings miss, is a big question, but the market has been unpredictable lately, so I would keep my ears open on the upcoming earnings call.The Bottom LineAs Nvidia continues to be a dominant player in AI and high-performance computing, the company has a clear opportunity to profit from the rising demand for such solutions, which is driving further growth and shareholder value. However, I don't think the upcoming Q3 FY2025 numbers will really surprise investors - demand is predictably outstripping supply, so I expect another profit and positive comments from management. On the other hand, I think the \"beat size\" will continue to fall, which could lead to a mixed reaction from market participants. Given this risk, I wouldn't over-inflate existing positions in NVDA stock ahead of the earnings results announcement.Thank you for reading!","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":373059873280304,"gmtCreate":1732108555616,"gmtModify":1732108560171,"author":{"id":"4087654469661740","authorId":"4087654469661740","name":"Monkseal","avatar":"https://static.tigerbbs.com/6adb23b3789de4a4067c75aafce84464","vip":1,"crmLevel":5,"crmLevelSwitch":1,"idStr":"4087654469661740","authorIdStr":"4087654469661740"},"htmlText":"...bearish rating aged like milk... - it's just a nice way of saying you are wrong. Yet you still continue not to correct your position but mislead further. Beat size is expected to shrink, but demand outstripped supply is simply an economic rule you can't go against and being a leader will continue to raise its stock price until a worthy rival appears to split the market share.","listText":"...bearish rating aged like milk... - it's just a nice way of saying you are wrong. Yet you still continue not to correct your position but mislead further. Beat size is expected to shrink, but demand outstripped supply is simply an economic rule you can't go against and being a leader will continue to raise its stock price until a worthy rival appears to split the market share.","text":"...bearish rating aged like milk... - it's just a nice way of saying you are wrong. Yet you still continue not to correct your position but mislead further. Beat size is expected to shrink, but demand outstripped supply is simply an economic rule you can't go against and being a leader will continue to raise its stock price until a worthy rival appears to split the market share.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/373059873280304","repostId":2484923910,"repostType":2,"repost":{"id":"2484923910","kind":"highlight","pubTimestamp":1732105200,"share":"https://ttm.financial/m/news/2484923910?lang=&edition=fundamental","pubTime":"2024-11-20 20:20","market":"us","language":"en","title":"Nvidia's Upcoming Q3 Is Unlikely To Surprise You","url":"https://stock-news.laohu8.com/highlight/detail?id=2484923910","media":"seekingalpha","summary":"First off, let me briefly overview the Q2 results, as my article came out before they were actually released.Nvidia has posted a stunning showing in its fiscal Q2 2025 report, generating record revenues of $30 billion - that's a 15% sequential increase and 122% growth over the previous year. The data center market was the largest contributor to this strong financial performance, which alone accounted for $26.3 billion . The growing use of generative AI, model training, and inferencing workloads ","content":"<html><head></head><body><ul style=\"\"><li><p>I don&#39;t think Nvidia Corporation&#39;s upcoming Q3 FY2025 numbers will really surprise investors — demand is predictably outstripping supply, so I expect another profit and positive comments from management.</p></li><li><p>Nvidia&#39;s strategic focus on AI and accelerated computing positions it for long-term growth, with significant contributions from generative AI and model training workloads.</p></li><li><p>On the other hand, I think the “beat size” will continue to fall, which could lead to a mixed reaction from market participants.</p></li><li><p>Nvidia&#39;s leadership in AI infrastructure and increased CAPEX from major tech firms suggest continued demand, but the stock price may face short-term pressure due to valuation premiums.</p></li><li><p>NVDA stock is a “Hold”.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6144f6f01bec9d39bca22c82ac595a7e\" alt=\"BING-JHEN HONG\" title=\"BING-JHEN HONG\" tg-width=\"750\" tg-height=\"500\"/><span>BING-JHEN HONG</span></p><h2 id=\"id_1525638553\">Intro &amp; Thesis</h2><p>I&#39;d long been skeptical about how high <strong>Nvidia Corporation</strong> (NASDAQ:NVDA) stock could go - unfortunately for my coverage history (and fortunately for buyers of Nvidia stock) my bearish rating aged like milk, so I decided to reassess my stance in late August this year. The last time I covered NVDA I was previewing its earnings for Q2. I expressed my thoughts that the company&#39;s bottom line or revenue wouldn&#39;t be significantly impacted by the GB200 production delays that many were discussing back then. As time has shown, Nvidia managed to beat Q2 earnings and the stock continued to rise, albeit at a much more modest pace:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/528c32ed9179bb9345b4dfe6f812a218\" alt=\"Seeking Alpha, the author&#39;s coverage of NVDA stock\" title=\"Seeking Alpha, the author&#39;s coverage of NVDA stock\" tg-width=\"640\" tg-height=\"372\"/><span>Seeking Alpha, the author&#39;s coverage of NVDA stock</span></p><p>Based on the indirect data we have today, I expect Nvidia Corporation (NVDA) is unlikely to be surprised by anything new - the company has significantly beaten consensus in recent quarters, although the extent of the beats has continued to decline. I expect Nvidia to beat the current consensus for the third quarter again without surprising investors with anything new - indirect data tells us that demand for Nvidia&#39;s GPUs is still outpacing supply, providing a solid foundation for future business expansion. I expect management to be positive again on the earnings call, stimulating the idea among market participants that growth isn&#39;t yet exhausted.</p><p>In my opinion, however, there&#39;s a risk of a drawdown after the publication of the results. Most of the positive developments are already priced in, and the market could see a potentially weaker earnings beat as the beginning of the end of the upward cycle in the short term. This possibility certainly can&#39;t be ruled out.</p><h3 id=\"id_1639236756\">Why Do I Think So?</h3><p>First off, let me briefly overview the Q2 results, as my article came out before they were actually released.</p><p>Nvidia has posted a stunning showing in its fiscal Q2 2025 report, generating record revenues of $30 billion - that&#39;s a 15% sequential increase and 122% growth over the previous year. The data center market was the largest contributor to this strong financial performance, which alone accounted for $26.3 billion (up 16% sequentially and 154% YoY). The growing use of generative AI, model training, and inferencing workloads drives the data center&#39;s growth. So naturally, the demand for Nvidia&#39;s Hopper and Blackwell GPU solutions, as well as its networking solutions, has played a critical role in this expansion.</p><p>Gaming too experienced significant growth, posting revenues of $2.88 billion, 9% sequentially and 16% year-over-year. It primarily accounts for this increase in demand for RTX-powered PCs and laptops, which are increasingly being utilized for AI. At the same time, Nvidia&#39;s Automotive and Robotics business lines are becoming significant growth areas as the firm posted 37% year-over-year growth in vehicle revenue as the company applied its technology to autonomous vehicle development.</p><p>The apps we all are used to use massive amounts of computational power, which Nvidia GPUs are necessary for. So NVDA&#39;s inference platform, which represented more than 40% of data center revenues, is particularly attractive to CSPs, consumer internet providers, and enterprises. That dependence is going to only increase as the next-generation AI engines use more and more compute power, setting Nvidia for long-term growth.</p><p>On the other hand, we also saw sequentially reduced gross margins for Nvidia as new products and inventories for low-yielding Blackwell materials were increased. However, the company&#39;s operating cash flow saved the day (NVDA generated ~$14.5 billion in CFO for the quarter). The company used ~$7.4 billion for repurchases and dividends, authorizing an additional $50 billion for buybacks and thus showing the market the management&#39;s focus on shareholder value creation. Furthermore, the gross margin decline was well anticipated, allowing Nvidia to easily beat the consensus expectations for the quarter:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/05c1a6306cade02f01fa88ee7e735f22\" alt=\"Seeking Alpha, NVDA\" title=\"Seeking Alpha, NVDA\" tg-width=\"640\" tg-height=\"120\"/><span>Seeking Alpha, NVDA</span></p><p>After Trump won the presidential chair, some people started to fear that the new administration&#39;s potential limits on US-China trade may limit Nvidia&#39;s top-line expansion. But I think it&#39;s not really a major threat to NVDA as it continued to limit its exposure to China - the revenue share in that region fell from 20.3% last year to 12.2% as of Q2 FY2025.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/4bede53047a2f4f068e6c94e94092edf\" alt=\"NVDA&#39;s 10-Q [Q2 FY2025]\" title=\"NVDA&#39;s 10-Q [Q2 FY2025]\" tg-width=\"640\" tg-height=\"130\"/><span>NVDA&#39;s 10-Q [Q2 FY2025]</span></p><p>Nvidia&#39;s strategic focus on AI and accelerated computing is a major advantage. The ecosystem and the availability of the company&#39;s CUDA software in all major cloud platforms appeal heavily to developers and businesses. The launch of the H200 platform, which offers 40% more memory bandwidth than its predecessor, also consolidates Nvidia&#39;s position as an AI infrastructure leader.</p><p>Looking ahead, Nvidia&#39;s management projected ~$32.5 billion in revenue for Q3 FY2025, fueled by continued data center growth and increased demand for Blackwell products. Blackwell production will begin in Q4 and several billion dollars of revenue from this new architecture is anticipated, according to the company. Gross margins are expected to remain at mid-70% due to the continuing move towards new products.</p><p>The problem is that the market is already pricing in sales growth to $33.1 billion, which is 1.84% above management&#39;s forecast. This appears to be a slight increase, but this optimism reduces the chances that the forecast will be significantly exceeded. Most likely, the trend of reducing the magnitude of positive surprises will continue in Q3 because in addition to the premium on revenue estimate, we see a premium on EPS forecast. According to Wall Street analysts, Nvidia should demonstrate an EPS growth rate that exceeds the revenue growth rate. This is thanks to its operating leverage, and I think it will be quite difficult for the company to achieve this, as gross margin stagnation is unlikely to go anywhere.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/c586ddd611a74784e66f08f7b5e10989\" alt=\"Seeking Alpha, NVDA\" title=\"Seeking Alpha, NVDA\" tg-width=\"640\" tg-height=\"253\"/><span>Seeking Alpha, NVDA</span></p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/9bc44245875643212cc71c7a3f203c1f\" alt=\"Seeking Alpha, NVDA\" title=\"Seeking Alpha, NVDA\" tg-width=\"640\" tg-height=\"253\"/><span>Seeking Alpha, NVDA</span></p><p><em>But why do I believe that there will still be another EPS/sales beating for Q3 (albeit not as strong as before due to higher market optimism)?</em></p><p>I recommend revisiting the indirect data I mentioned at the start of the article. Fortunately, most of the major clients - large tech firms - reported their last quarter earnings at the end of October and the beginning of November. This allows us to assess demand by examining the trends in their cloud segments.</p><p>Google Cloud&#39;s (GOOGL) (GOOG) revenue growth, for example, jumped to 35% year over year, while Microsoft Azure&#39;s (MSFT) growth - though slower - will likely continue to pick up speed as additional capacity becomes available. This means there&#39;s good demand for Nvidia products as these tech giants continue to invest in AI and cloud infrastructure, which rely heavily on Nvidia GPUs.</p><p>In addition, the anticipated surge in capital spending on large cloud providers is a positive sign for Nvidia. Major companies such as Microsoft, Google, and Amazon (AMZN) all announced plans to add CAPEX as a way of scaling their AI and cloud solutions. The resulting increase in spending will likely drive demand for Nvidia GPUs, which are key components for AI and cloud applications.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/5b10d0cd1ec2712c8e2845c00f32fa65\" alt=\"Goldman Sachs [proprietary source, November 2024]\" title=\"Goldman Sachs [proprietary source, November 2024]\" tg-width=\"640\" tg-height=\"271\"/><span>Goldman Sachs [proprietary source, November 2024]</span></p><p>For all these reasons, Nvidia&#39;s leadership position in the market and continued growth in AI and cloud infrastructure indicate good prospects to surpass estimates for earnings per share. This would give the management more room to be positive during the upcoming earnings call.</p><p>As Goldman Sachs analysts noted in their November note (proprietary source), the global AI infrastructure market also confirms Nvidia&#39;s ability to exceed expectations. SK Hynix and Samsung have seen a surge in revenues for their high-bandwidth memory (HBM) products, essential to AI workloads, which indicates the huge appetite for AI-related hardware. Advanced Micro Devices&#39; (AMD) further rise in its forecast for its AI accelerator market and data center GPU revenue also underscores the growing market for AI infrastructure. This explosion in AI use cases across the range of businesses from auto to healthcare indicates that Nvidia&#39;s technology is in demand, laying the foundation for earnings surprises.</p><p>So I do not think investors will be in for a big surprise when the Q3 results are published - Nvidia is set for another earnings beat. But again, with the market already giving a premium to management&#39;s guidance and the problems of stagnating margins not going away, I think the beat will be smaller than many expect. This could cause the stock to fall in the short term as it is pressured from the premium to its valuation.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/40c68d11219a63bfb60784df19fd7a69\" alt=\"Morningstar Premium, NVDA [proprietary source]\" title=\"Morningstar Premium, NVDA [proprietary source]\" tg-width=\"640\" tg-height=\"269\"/><span>Morningstar Premium, NVDA [proprietary source]</span></p><p>I have to say right away that I do not think NVDA is overvalued. If the growth forecasts really come true and the leading position doesn&#39;t lose relevance, then the current 49x in forward P/E ratio is well deserved. On the other hand, such high multiples usually lead to a certain vulnerability of the stock price as soon as the company shows even the slightest sign of weakness. What exactly that sign might be, aside from the actual earnings miss, is a big question, but the market has been unpredictable lately, so I would keep my ears open on the upcoming earnings call.</p><h2 id=\"id_4155394456\">The Bottom Line</h2><p>As Nvidia continues to be a dominant player in AI and high-performance computing, the company has a clear opportunity to profit from the rising demand for such solutions, which is driving further growth and shareholder value. However, I don&#39;t think the upcoming Q3 FY2025 numbers will really surprise investors - demand is predictably outstripping supply, so I expect another profit and positive comments from management. On the other hand, I think the &#34;beat size&#34; will continue to fall, which could lead to a mixed reaction from market participants. Given this risk, I wouldn&#39;t over-inflate existing positions in NVDA stock ahead of the earnings results announcement.</p><p><em>Thank you for reading!</em></p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Nvidia's Upcoming Q3 Is Unlikely To Surprise You</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nNvidia's Upcoming Q3 Is Unlikely To Surprise You\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-20 20:20 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4738645-nvidia-upcoming-q3-is-unlikely-to-surprise-you><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>I don't think Nvidia Corporation's upcoming Q3 FY2025 numbers will really surprise investors — demand is predictably outstripping supply, so I expect another profit and positive comments from ...</p>\n\n<a href=\"https://seekingalpha.com/article/4738645-nvidia-upcoming-q3-is-unlikely-to-surprise-you\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU2462157665.USD":"ALLIANZ GLOBAL INCOME \"A\" (USD) INC","LU2458330169.SGD":"FRANKLIN SHARIAH TECHNOLOGY \"A\" (SGD) ACC","LU1116320901.HKD":"BGF SYSTEMATIC GLOBAL ENHANCED EQUITY YIELD \"A6\" (HKD) INC","LU2491050071.SGD":"WELLINGTON SUSTAINABLE OUTCOMES \"A\" (SGDHDG) ACC","BK4549":"软银资本持仓","LU0265550946.USD":"BGF SYSTEMATIC GLOBAL ENHANCED EQUITY YIELD \"A5\" (USD) INC","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","LU2360032135.SGD":"ALLSPRING GLOBAL EQUITY ENHANCED INCOME \"A\" (SGDHDG) INC","LU1791710400.SGD":"Fidelity Global Demographics A-ACC-SGD","LU1983260115.SGD":"Janus Henderson Horizon Global Sustainable Equity A2 SGD-H","LU0719512351.SGD":"JPMorgan Funds - 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US Appreciation A Acc USD","SGXZ23171101.USD":"NIKKO AM SHENTON GLOBAL OPPORTUNITIES (USD) ACC","LU0127658192.USD":"EASTSPRING INVESTMENTS GLOBAL TECHNOLOGY \"A\" (USD) ACC","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","LU0251132253.USD":"FIDELITY FUNDS  GLOBAL THEMATIC OPPORTUNITIES \"A\" (USD) ACC","LU2456880835.USD":"ALLIANZ GLOBAL INCOME \"AT\" (USD) ACC","IE0034235303.USD":"PINEBRIDGE US RESEARCH ENHANCED CORE EQUITY \"A\" (USD) ACC","LU0069063385.USD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (USD) ACC","BK4551":"寇图资本持仓"},"source_url":"https://seekingalpha.com/article/4738645-nvidia-upcoming-q3-is-unlikely-to-surprise-you","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2484923910","content_text":"I don't think Nvidia Corporation's upcoming Q3 FY2025 numbers will really surprise investors — demand is predictably outstripping supply, so I expect another profit and positive comments from management.Nvidia's strategic focus on AI and accelerated computing positions it for long-term growth, with significant contributions from generative AI and model training workloads.On the other hand, I think the “beat size” will continue to fall, which could lead to a mixed reaction from market participants.Nvidia's leadership in AI infrastructure and increased CAPEX from major tech firms suggest continued demand, but the stock price may face short-term pressure due to valuation premiums.NVDA stock is a “Hold”.BING-JHEN HONGIntro & ThesisI'd long been skeptical about how high Nvidia Corporation (NASDAQ:NVDA) stock could go - unfortunately for my coverage history (and fortunately for buyers of Nvidia stock) my bearish rating aged like milk, so I decided to reassess my stance in late August this year. The last time I covered NVDA I was previewing its earnings for Q2. I expressed my thoughts that the company's bottom line or revenue wouldn't be significantly impacted by the GB200 production delays that many were discussing back then. As time has shown, Nvidia managed to beat Q2 earnings and the stock continued to rise, albeit at a much more modest pace:Seeking Alpha, the author's coverage of NVDA stockBased on the indirect data we have today, I expect Nvidia Corporation (NVDA) is unlikely to be surprised by anything new - the company has significantly beaten consensus in recent quarters, although the extent of the beats has continued to decline. I expect Nvidia to beat the current consensus for the third quarter again without surprising investors with anything new - indirect data tells us that demand for Nvidia's GPUs is still outpacing supply, providing a solid foundation for future business expansion. I expect management to be positive again on the earnings call, stimulating the idea among market participants that growth isn't yet exhausted.In my opinion, however, there's a risk of a drawdown after the publication of the results. Most of the positive developments are already priced in, and the market could see a potentially weaker earnings beat as the beginning of the end of the upward cycle in the short term. This possibility certainly can't be ruled out.Why Do I Think So?First off, let me briefly overview the Q2 results, as my article came out before they were actually released.Nvidia has posted a stunning showing in its fiscal Q2 2025 report, generating record revenues of $30 billion - that's a 15% sequential increase and 122% growth over the previous year. The data center market was the largest contributor to this strong financial performance, which alone accounted for $26.3 billion (up 16% sequentially and 154% YoY). The growing use of generative AI, model training, and inferencing workloads drives the data center's growth. So naturally, the demand for Nvidia's Hopper and Blackwell GPU solutions, as well as its networking solutions, has played a critical role in this expansion.Gaming too experienced significant growth, posting revenues of $2.88 billion, 9% sequentially and 16% year-over-year. It primarily accounts for this increase in demand for RTX-powered PCs and laptops, which are increasingly being utilized for AI. At the same time, Nvidia's Automotive and Robotics business lines are becoming significant growth areas as the firm posted 37% year-over-year growth in vehicle revenue as the company applied its technology to autonomous vehicle development.The apps we all are used to use massive amounts of computational power, which Nvidia GPUs are necessary for. So NVDA's inference platform, which represented more than 40% of data center revenues, is particularly attractive to CSPs, consumer internet providers, and enterprises. That dependence is going to only increase as the next-generation AI engines use more and more compute power, setting Nvidia for long-term growth.On the other hand, we also saw sequentially reduced gross margins for Nvidia as new products and inventories for low-yielding Blackwell materials were increased. However, the company's operating cash flow saved the day (NVDA generated ~$14.5 billion in CFO for the quarter). The company used ~$7.4 billion for repurchases and dividends, authorizing an additional $50 billion for buybacks and thus showing the market the management's focus on shareholder value creation. Furthermore, the gross margin decline was well anticipated, allowing Nvidia to easily beat the consensus expectations for the quarter:Seeking Alpha, NVDAAfter Trump won the presidential chair, some people started to fear that the new administration's potential limits on US-China trade may limit Nvidia's top-line expansion. But I think it's not really a major threat to NVDA as it continued to limit its exposure to China - the revenue share in that region fell from 20.3% last year to 12.2% as of Q2 FY2025.NVDA's 10-Q [Q2 FY2025]Nvidia's strategic focus on AI and accelerated computing is a major advantage. The ecosystem and the availability of the company's CUDA software in all major cloud platforms appeal heavily to developers and businesses. The launch of the H200 platform, which offers 40% more memory bandwidth than its predecessor, also consolidates Nvidia's position as an AI infrastructure leader.Looking ahead, Nvidia's management projected ~$32.5 billion in revenue for Q3 FY2025, fueled by continued data center growth and increased demand for Blackwell products. Blackwell production will begin in Q4 and several billion dollars of revenue from this new architecture is anticipated, according to the company. Gross margins are expected to remain at mid-70% due to the continuing move towards new products.The problem is that the market is already pricing in sales growth to $33.1 billion, which is 1.84% above management's forecast. This appears to be a slight increase, but this optimism reduces the chances that the forecast will be significantly exceeded. Most likely, the trend of reducing the magnitude of positive surprises will continue in Q3 because in addition to the premium on revenue estimate, we see a premium on EPS forecast. According to Wall Street analysts, Nvidia should demonstrate an EPS growth rate that exceeds the revenue growth rate. This is thanks to its operating leverage, and I think it will be quite difficult for the company to achieve this, as gross margin stagnation is unlikely to go anywhere.Seeking Alpha, NVDASeeking Alpha, NVDABut why do I believe that there will still be another EPS/sales beating for Q3 (albeit not as strong as before due to higher market optimism)?I recommend revisiting the indirect data I mentioned at the start of the article. Fortunately, most of the major clients - large tech firms - reported their last quarter earnings at the end of October and the beginning of November. This allows us to assess demand by examining the trends in their cloud segments.Google Cloud's (GOOGL) (GOOG) revenue growth, for example, jumped to 35% year over year, while Microsoft Azure's (MSFT) growth - though slower - will likely continue to pick up speed as additional capacity becomes available. This means there's good demand for Nvidia products as these tech giants continue to invest in AI and cloud infrastructure, which rely heavily on Nvidia GPUs.In addition, the anticipated surge in capital spending on large cloud providers is a positive sign for Nvidia. Major companies such as Microsoft, Google, and Amazon (AMZN) all announced plans to add CAPEX as a way of scaling their AI and cloud solutions. The resulting increase in spending will likely drive demand for Nvidia GPUs, which are key components for AI and cloud applications.Goldman Sachs [proprietary source, November 2024]For all these reasons, Nvidia's leadership position in the market and continued growth in AI and cloud infrastructure indicate good prospects to surpass estimates for earnings per share. This would give the management more room to be positive during the upcoming earnings call.As Goldman Sachs analysts noted in their November note (proprietary source), the global AI infrastructure market also confirms Nvidia's ability to exceed expectations. SK Hynix and Samsung have seen a surge in revenues for their high-bandwidth memory (HBM) products, essential to AI workloads, which indicates the huge appetite for AI-related hardware. Advanced Micro Devices' (AMD) further rise in its forecast for its AI accelerator market and data center GPU revenue also underscores the growing market for AI infrastructure. This explosion in AI use cases across the range of businesses from auto to healthcare indicates that Nvidia's technology is in demand, laying the foundation for earnings surprises.So I do not think investors will be in for a big surprise when the Q3 results are published - Nvidia is set for another earnings beat. But again, with the market already giving a premium to management's guidance and the problems of stagnating margins not going away, I think the beat will be smaller than many expect. This could cause the stock to fall in the short term as it is pressured from the premium to its valuation.Morningstar Premium, NVDA [proprietary source]I have to say right away that I do not think NVDA is overvalued. If the growth forecasts really come true and the leading position doesn't lose relevance, then the current 49x in forward P/E ratio is well deserved. On the other hand, such high multiples usually lead to a certain vulnerability of the stock price as soon as the company shows even the slightest sign of weakness. What exactly that sign might be, aside from the actual earnings miss, is a big question, but the market has been unpredictable lately, so I would keep my ears open on the upcoming earnings call.The Bottom LineAs Nvidia continues to be a dominant player in AI and high-performance computing, the company has a clear opportunity to profit from the rising demand for such solutions, which is driving further growth and shareholder value. However, I don't think the upcoming Q3 FY2025 numbers will really surprise investors - demand is predictably outstripping supply, so I expect another profit and positive comments from management. On the other hand, I think the \"beat size\" will continue to fall, which could lead to a mixed reaction from market participants. Given this risk, I wouldn't over-inflate existing positions in NVDA stock ahead of the earnings results announcement.Thank you for reading!","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":6,"commentSize":1,"repostSize":1,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false}}