Nvidia, the leading technology giant in the semiconductor industry, shows promising potential for an upside in its latest quarterly financial results and guidance, thanks to the ongoing high demand for artificial intelligence solutions from cloud service providers and enterprises. According to analysts at Oppenheimer, the company is poised to deliver its financial figures for the fiscal second quarter on August 28.
Expectations are high, with non-GAAP earnings projected at $0.62 per share, while net sales are estimated to exceed a staggering $28.04 billion. In contrast, analysts surveyed by Capital IQ anticipate earnings of $0.64 per share and slightly higher sales at $28.59 billion. Oppenheimer’s analysts, Rick Schafer, Wei Mok, and Dustin Fowler, noted that although lead times have returned to normal, the supply chain issues persist, notably influenced by constrained advanced packaging capacity.
They expect that Nvidia's B100 chip will make its market debut in low volumes during the fourth quarter, but they anticipate a substantial increase in production in the subsequent quarter. In the meantime, the Hopper graphics processing unit is predicted to meet the existing market demands. Furthermore, Nvidia's NVL36 and NVL72 rack systems provide a competitive advantage that may help propel its market performance.
The analysts forecast that initial preferences will likely lean towards the NVL36, as it is best suited to integrate with existing data center infrastructure. The data center segment is anticipated to experience robust growth in the second quarter, primarily driven by the H100 GPU, with additional contributions from the H200 during the current three-month period.
The report also suggests that Nvidia is likely to secure lasting gains in InfiniBand market share in the near future. Despite a 1.9% decrease in shares observed during Tuesday’s late-afternoon trading hours, Nvidia's stock has surged over 150% this year, reflecting investor enthusiasm amid the artificial intelligence boom.
In the gaming sector, the RTX platform is expected to be a key driver of second-quarter performance, with the inventory levels across channels regarded as 'healthy.' Notably, it’s anticipated that Nvidia's next-generation Tegra GPU will be incorporated into the upcoming Nintendo Switch 2, set for release in the first half of 2025. Oppenheimer has revised its adjusted earnings per share outlook, raising estimates for fiscal 2025 to $2.70 from a prior forecast of $2.62.
For fiscal 2026, the estimate has risen to $3.77 from $3.32, with fiscal 2027 expectations increasing to $4.43 from $4.11. This optimistic guidance reflects an improved situation in supply chains, as mentioned in their report. Analysts express a strong belief that Nvidia is strategically positioned for advancement in the AI landscape.
The company boasts the best operational and gross margin profile in its category, further enhancing its standing. Oppenheimer has maintained its 'outperform' rating, coupled with a price target of $150. They concluded their assessment with a sentiment of long-term bullishness toward Nvidia’s stock..