NVIDIA Earnings Preview: Continued Optimism

The main reasons are:

1. Outstanding performance;

2. Strong demand for GPUs, with major customers' capital expenditures continuing to rise;

3. Index reaching new highs.

Analysts expect NVIDIA's total revenue for the first fiscal quarter to be $24.69 billion, a year-over-year increase of 243.3%. Growth is accelerating; last quarter saw a growth of 205%, and the quarter before that was 101%. Earnings per share are expected to grow 418% year-over-year to $5.65. The most important data center business revenue is expected to be $21.06 billion, a significant year-over-year increase of 391.6%.

NVIDIA's customer profile is very typical; the top five customers seem to account for more than 60% of the revenue. Therefore, analyzing the demand and expenditures of major customers should suffice.

Several tech giants have already released their Q1 earnings reports:

Meta: The company has raised its capital expenditure forecast by $10 billion for this year, bringing the total to between $35 billion and $40 billion (Q1 capital expenditure decreased quarter-over-quarter, but is up for the year).

Google: Google’s Chief Financial Officer Ruth Porat stated that the company will spend around $12 billion or more on capital expenditures each quarter this year, with most of it going towards building new data centers.

Microsoft: CFO Amy Hood mentioned that the company's capital expenditure for the most recent quarter was $14 billion, and it is expected to continue to "significantly" increase. However, growth in 2025 is expected to be noticeably slower compared to 2024. Therefore, NVIDIA's revenue growth for 2025 is projected to be 25% (according to previous reports), but it should be at least 30% based on current trends. The company might only discuss growth slowdown in the next or subsequent quarters.

Previous concerns about a second inflation spike in April, as well as geopolitical and U.S.-China relations (with the upcoming elections in November), appear to have been overly cautious.

Recent CPI data has alleviated fears of a second inflation spike, and geopolitical and U.S.-China relations seem stable. As a result, the index has reached new highs (Microsoft also hit new highs during its conference last night).

Optimism continues, and a review of Q1 13F filings shows that most large institutions are buying into big tech stocks.

Unlike before,Currently, NVIDIA has already reached a new closing high, unlike the previous earnings report where the stock fell first and then surged post-report. While the outlook for this earnings report remains positive, it is unlikely to see a 16% spike like last time.