Nvidia, a leading player in the technology sector, is poised to surpass fiscal second-quarter earnings estimates, according to recent insights from Wedbush Securities. The brokerage's analysis, detailed in a client communication on Friday, indicates sustained demand for artificial intelligence (AI)-related hardware with no visible signs of a slowdown. Wedbush now anticipates that Nvidia will report earnings per share (EPS) of $0.67 and revenue of $29.99 billion for the July quarter, significantly up from its previous forecasts of $0.62 EPS and revenues of $28.02 billion.
The consensus estimates on Capital IQ project normalized EPS of $0.64 and GAAP EPS of $0.60, alongside a revenue expectation of $28.71 billion. "Nvidia has consistently managed to outperform expectations by approximately $2 billion, while guiding for $2 billion in sequential growth," stated Matt Bryson, an analyst at Wedbush, in the note.
"We fully expect to see a similar result in the current quarter, prompting us to adjust our models accordingly." The encouraging outlook is attributed primarily to elevated data center assumptions that have reportedly outweighed revised downward projections for Nvidia’s gaming segment. Bryson notes that recent investigations conducted by Wedbush have shown a surge in shipments related to Nvidia's graphics processing unit microarchitecture, known as Hopper, along with an increase in GPU system production expected for the latter half of the 2024 calendar year.
Additionally, signs indicate no deceleration in AI-driven demand. Nvidia is scheduled to announce its second-quarter outcomes next week, with expectations that the company will provide insights into its forthcoming generative AI architecture, Blackwell. Colette Kress, the Chief Financial Officer, previously mentioned during the first-quarter earnings call that the Blackwell platform is likely to be globally available "later this year," according to a transcript from Capital IQ. Bryson expressed optimism about the demand for the Hopper architecture, suggesting it mitigates the potential impact of delays in the Blackwell rollout on Nvidia’s short-term financial results.
He elaborated that conversations have consistently pointed towards a ramp-up for Blackwell not occurring until 2025, which he believes will limit any significant effects these delays may impose on Nvidia's fiscal results for 2025. For the current fiscal year, Wedbush now projects Nvidia to record EPS of $2.78 and revenue reaching $123.03 billion, an increase from previous estimates of $2.63 EPS and $116.48 billion in revenue.
The broader market is anticipating normalized EPS of $2.75 and GAAP EPS of $2.61, with revenue anticipated at $121.26 billion for fiscal year 2025. In light of these expectations, Wedbush has reiterated its outperform rating on Nvidia’s stock and raised the 12-month price target to $138 from an earlier target of $120. Current Stock Price: $127.88, Change: +4.14, Percent Change: +3.35.