NVIDIA Corporation NVDA is preparing to reveal its financial results for the fiscal second quarter of 2025 on Aug 28.
Anticipated revenue for the quarter is expected to be around $28 billion (+/-2%). The Zacks Consensus Estimate rests at $28.24 billion, displaying an impressive 109% growth compared to the previous year’s figures.
In terms of earnings, the Zacks Consensus Estimate has held steady at 0.63 cents per share for the last 60 days. This suggests a significant 133.3% year-over-year increase from the same quarter the year before, with earnings at 27 cents per share.
Earnings for NVIDIA, renowned for its graphics processing unit (GPU)-accelerated computing, have surpassed the Zacks Consensus Estimate in the past four quarters, with an average positive surprise of 18.4%.
Factors Influencing Future Results
The growth in NVDA’s Datacenter business, driven by the surge in cloud-based solutions and the rise of hybrid working scenarios, is expected to contribute to strong revenues for the second quarter. Increased demand in Hyperscale and the inference market are likely factors that supported growth in the last quarter.
The Datacenter end-market segment is poised for growth due to the elevated demand for generative AI and large language models using GPUs based on NVIDIA Hopper and Ampere architectures. Strong demand from major cloud service providers and consumer internet companies is forecasted to drive the segment’s revenue growth substantially. Estimates suggest a $24.51 billion revenue for the Datacenter end market, indicative of a robust 137% year-over-year growth.
Furthermore, NVIDIA’s Gaming and Professional Visualization segments have shown signs of recovery, with both end markets seeing increased demand. Gaming end market revenues grew by 18% year-over-year in the first quarter of fiscal 2025, with a projected $2.77 billion revenue for the second quarter, an 11.5% increase from the previous year.
The Professional Visualization segment also reflected recovery, with a 45% year-over-year revenue increase in the first quarter. Projections indicate a $475.7 million revenue for the Professional Visualization segment in the second quarter, marking a 25.5% increase from the year before.
Additionally, NVIDIA’s Automotive sector has shown positive trends in seven of the last eight quarters, with an expected 16% year-over-year growth in revenue for the second quarter. Investments in self-driving and AI cockpit solutions are driving this growth.
Performance and Valuation Overview
NVDA stock has soared 159.4% year-to-date, outperforming the Semiconductor – General industry’s growth of 112.5%. NVIDIA’s stock has outpaced major chip makers such as Micron, Marvell Technology, and Advanced Micro Devices, with respective gains of 26.8%, 18.6%, and 6.9% YTD.
Presently, NVIDIA trades at a premium with a forward 12-month P/S of 23.02X compared to the industry’s 18.97X, indicating a rich valuation.
GenAI’s Role in Driving Future Growth
NVIDIA’s revenue growth over the past year has been propelled by the demand for chips needed for generative AI model building. NVIDIA leads the generative AI chip market, with its applications spanning various industries, from marketing to healthcare.
The global generative AI market is projected to reach $967.6 billion by 2032, growing at a CAGR of 39.6% from 2024 to 2032. Enterprises seeking to leverage generative AI will need to upgrade their network infrastructures significantly, presenting an opportunity for NVIDIA’s advanced chips such as the A100, H100, and B100.
With generative AI revolutionizing industries, NVIDIA is poised to experience substantial growth in revenue and market presence.
Concluding Thoughts
As a key player in the semiconductor industry, NVIDIA’s strong presence in GPUs and strategic forays into AI, data centers, and autonomous vehicles have been advantageous. Additionally, being a Zacks Rank #2 (Buy) company, NVIDIA’s trajectory indicates a bright future.