Nvidia Corporation (NVDA) is scheduled to report second-quarter earnings on August 17.
Shares of the company have gained 52% since January, trading at $199.50 heading into Tuesday.
Solid Q2 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting. (See Nvidia stock charts on TipRanks)
Q2 Projections
The Street expects NVIDIA to report adjusted EPS of $1.02, and revenues of $6.3 billion.
Nvidia expects revenues of around $6.3 billion (give or take $126 million) for Q2. Further, the company continues to predict its Gaming and Data Center segments to register sequential revenue growth in the second quarter.
NVIDIA’s Prior Quarter Snapshot
Q1 revenues came in at $5.7 billion, increasing 84% year-over-year, and beating the consensus estimate of $5.41 billion.
Adjusted earnings came in at $3.66 per share, a jump of 103% on a year-over-year basis.
What to Watch Out for in NVIDIA Earnings
NVIDIA appears to be in a strong position to profit from the growing Gaming, Data Center, Professional Visualization, and Automotive segments. Gaming and Data Centers, in particular, are two businesses that have performed well in 2020 and will continue to do so in 2021.
These businesses were driven by the pandemic-induced, work-from-home, online-learning trend, and the increased usage of cloud-based solutions.
Gaming, for instance, reported record revenue in the first quarter. It increased 106% year-over-year to $2.76 billion.
As online gaming systems demand more processing power, the demand for additional graphics processing units (GPUs) increases, giving Nvidia significant growth potential. The company’s GeForce RTX 30 Series GPUs for gamers have been in high demand, resulting in increased revenues for the company.
Furthermore, Nvidia expects to benefit from cloud gaming’s fast growth. The company offers its own cloud gaming service, namely, GeForce NOW. The firm reported on July 15 that the overall number of titles accessible on GeForce NOW had reached 1,000, with nearly 100 of them being free-to-play.
Going forward, Gaming is also expected to benefit from strong crypto-mining demand. In Q1, the company developed the Cryptocurrency Mining Processor (CMP), a separate product line for professional miners, in response to the growing demand for GeForce GPUs among miners.
Nvidia CMPs earned revenues of $155 million in Q1. Investors should take note that the company expects revenues from CMPs to be $400 million in the upcoming quarter.
Data Center revenues grew 79% from the year-ago quarter, to over $2 billion for the first time in Q1.
The increasing use of cloud-based solutions has strengthened this segment. Specifically, the NVIDIA computing platform enables modern data centers to accelerate deep learning, machine learning, and high-performance computing applications, resulting in increased demand for NVIDIA GPUs in data centers.
Furthermore, the company’s data-center business benefits from the growing Hyperscale demand. Increased adoption of NVIDIA’s A100 GPUs by hyperscale customers, and vertical industries, is expected to have been a major catalyst in the quarter to come.
Analyst’s Opinion on NVIDIA
Ahead of the Q2 earnings release, Bank of UBS analyst Timothy Arcuri reiterated a Buy rating on the stock, and increased the price target to $230 from $184. This implies 15.3% upside potential to current levels.
Arcuri is upbeat about NVIDIA’s impending earnings, predicting “another solid beat and raise” in the second quarter, thanks to growth in the Data Center sector.
Consensus among analysts is a Strong Buy based on 28 Buys and one Hold. The average NVDA price target of $212.29 implies 6.4% upside potential from current levels.
TipRanks data also shows that financial blogger opinions are 93% Bullish on NVDA, compared to a sector average of 70%.
Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
