US technology stocks continued to lead the market this week. The three major stock indexes all hit record highs. Nvidia, the “superweight stock” and “king of AI chips,” surpassed the NASDAQ with a 9.22% increase in the past month. It will release financial reports after next Wednesday. The spring rebound in US stocks is facing a critical test.

Wall Street analysts generally expect that in the first quarter ending April, Nvidia's revenue is expected to reach 24.6 billion US dollars, an increase of more than double the previous year. By the end of the fiscal year in January 2025, quarterly sales are expected to break the 30 billion US dollar mark; net profit for the same period is expected to be 13.86 billion US dollars, an increase of more than 500% year over year.

Between earnings releases for this quarter, is it time to buy Nvidia stock? What are the highlights of this financial report?

Analysts believe that this financial report should focus on three points. First, will Nvidia's performance exceed expectations, and what is the profit margin trend? The second is the production capacity of the newly launched Blackwell architecture, and finally, will the growth rate of demand slow down when the GB200 and the previous generation of chips are replaced?

The market is concerned about these three points

1. What is the profit margin trend?

Undoubtedly, Nvidia's performance growth rate and demand for its AI chips are still growing rapidly. Zacks earnings ESP (expected surprise) shows that Nvidia's profit may once again exceed expectations. The most accurate estimate is $5.68 per share.

Notably, Nvidia's profit has exceeded expectations for five consecutive quarters. In the past four quarterly reports, the average probability of profit exceeding expectations reached 20.18%. On the sales side, sales are expected to increase 237% in the first quarter, after Nvidia's sales surpassed expectations for 20 consecutive quarters.

2. New developments in the Blackwell series of chips

As the “leader” of AI chips, Nvidia has surpassed $1 trillion in market capitalization this year, and last year the company predicted that demand for its H100 processor would double its revenue.

Since then, Nvidia has also introduced newer and more expensive Blackwell series chips. Nvidia CEO Hwang In-hoon believes that as major competitors such as IBM and Ali launch new challenges, the annual growth rate of the data center market will reach 250 billion US dollars, and Nvidia will gain a larger share than other chip companies.

Wall Street will keep an eye on the latest developments in the Blackwell family of GPUs, which the company says will be the highest-performing AI chip on the market, surpassing the current H200 series and AMD's MI300 series.

Currently, the Blackwell series is expected to be launched in October or November, and the price of a single GPU may be around $30,000 to $40,000. The release of this product will reinforce Nvidia's current forecast of achieving high double-digit growth in fiscal year 2025 and fiscal year 2026.

3. Growth in demand for modernization

Also, a term often mentioned recently when discussing Nvidia is “air pocket,” that is, investors want to know if Nvidia will experience some kind of deceleration in demand growth as customers prepare for Blackwell's listing.

Vivek Arya, an analyst at BofA Securities, warned:

Nvidia's stock price is likely to fluctuate in the short term, partly due to Blackwell's previous deceleration in demand. Although some investors expect sales this quarter to reach nearly $28 billion, which is higher than the consensus estimate of $265 billion, the stock price is likely to react adversely in line with these bullish prospects.

Jefferies analyst Blayne Curtis said:

We've often heard concerns about BlackWell's Air Pocket coming out after the launch, but we haven't seen any sign of this, cloud service providers are still chasing supply, and they have a long list of customers who couldn't get their products last year.

We believe that the release of GB200 NVL products will be the main driving force for this event, and Nvidia will once again extend their control to a wider range of artificial intelligence systems.

KeyBanc Capital Markets analyst John Vinh also said that although it is expected that a new generation of Blackwell GPUs will be launched in the second half of the year, there are limited signs that demand will stop. It is expected that Nvidia's first quarter results and second quarter results guidance announced by Nvidia will greatly exceed expectations.

Oppenheimer's Rick Schafer pointed out that the market's demand for Nvidia chips “will never be satisfied,” and this is already very clear.

Is it time to buy Nvidia stock?

The analysis predicts that due to increased performance, Nvidia's valuation will be more reasonable. The current forward price-earnings ratio is 39.4 times, far below its five-year high of 122.1 times, and a discount of about 29% compared to the median of 55.6 times.

In addition, Nvidia's performance will also be the key to the current round of rebound in the US stock market. The S&P 500 index rose by more than 11.8% throughout the year, and has risen by more than 22% since the Federal Reserve began raising interest rates more than two years ago. The S&P 500's overall profit is expected to grow 10.4% this year and 14.1% in 2025.

According to LSEG data, the communications services industry, including Google and Meta, and the information technology industry, which includes Microsoft, Apple, and Nvidia, will contribute more than half of the revenue of the S&P 500 index of 494.4 billion US dollars in the second quarter.