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Nvidia Earnings: The “Superbowl of AI”

Zacks Rank #1 (Strong Buy) stock Nvidia (NVDA) is up 226% over the past year, and its market cap has ballooned to more than $2 trillion. For these reasons, next Wednesday the company’s earnings report will be the most highly anticipated event of this earning’s season. Nvidia’s cutting-edge graphics processing units (GPUS) are powering the AI revolution and, thus, powering the stock. Today, we will examine 3 key items to watch when the Zacks Ranked “Strong Buy” stock reports earnings:

Expectations

On Wall Street, expectations and forward-looking statements are everything. For example, a company could presumably grow their earnings at 90% (which is a very healthy growth rate), but if Wall Street was expecting triple-digit EPS growth, the stock is likely to fall regardless. In addition, if a company reports earnings above Wall Street expectations but communicates an uncertain or slightly negative future quarter, investors will punish the stock.

In the case of Nvidia, expectations are sky-high. Zacks consensus estimates suggest that quarterly earnings will explode by 406%, year-over-year.

Image Source: Zacks Investment Research

A Bullish EPS Surprise History

Though these expectations may seem unrealistic, NVDA’s EPS surprise history says they are possible. NVDA has beat consensus estimates for 18 of the past 20 quarters.

Odds of a Beat are High

Beyond NVDA’s strong EPS surprise history NVDA has a best possible Zacks Rank of Strong Buy. Zacks Investment Research’s extensive in-house back testing indicates that stocks with a rank of “Hold” (#3) or better coupled with a positive Earnings Surprise Prediction (ESP) score tend to beat on earnings and outperform, with all else equal.

“Blackwell” Commentary

Nvidia’s latest chip enables organizations to run large language models at up to 25x less cost and energy consumption than its predecessor. Investors will be watching any new commentary on theearnings conference callbecause Blackwell is seen as a major bullish catalyst by the street.

China Impact

Recent news headlines suggest that Chinese regulators urged local tech firms to buy fewer Nvidia chips. How will this impact the company’s outlook?

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.