Nvidia beating earnings expectations is worst-kept secret on Wall Street
Nvidia will announce its 2Q2025 earnings on August 23rd (est.).
I reckon Nvidia may once again exceed earnings estimates, keeping its share price elevated.
Nvidia has consistently outperformed both Wall Street and its own estimates in the last six earnings calls.
Wall Street's revenue estimates have been rather conservative, averaging just 2.3% above Nvidia’s own estimates over the past four quarters.
For example, in 1Q2025, Nvidia estimated revenue at $24 billion, while Wall Street expected $24.65 billion (2.7% above Nvidia’s estimate). However, the actual revenue was $26.04 billion.
Based on the past six quarterly earnings results, Nvidia tends to provide conservative forecasts and subsequently beat them.
Furthermore, Nvidia’s actual GAAP and Non-GAAP gross margins have also surpassed its own estimates in the last six quarters, and EPS has consistently beaten Wall Street estimates.
Thus, there is a good likelihood Nvidia could exceed both Wall Street and its own estimates again in the coming quarter.
Nvidia is shipping its new artificial intelligence chip, Blackwell, this quarter, which will start contributing to this quarter’s earnings. Customers purchasing Blackwell chips include Amazon Web Services, Google, Meta, Microsoft, OpenAI, and Tesla.
NVIDIA also plans to release a new chip for artificial intelligence annually instead of every other year. Big tech firms may continue to buy the new chips to avoid lagging in AI development.
Overall, we remain constructive on Nvidia as the earnings growth momentum looks poised to sustain its impressive bull run.
Source: Bloomberg, Tiger Brokers, 24 May 2024
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