TipRanks
6 min read
In This Article:
Nvidia’s (NVDA) earnings figures are set to be published tomorrow, and as usual, the Santa Clara, California-based tech giant faces a very high bar—it needs to deliver a standout quarter along with strong guidance to impress the markets.
-
Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions
-
Receive undervalued, market resilient stocks right to your inbox with TipRanks' Smart Value Newsletter
From a business fundamentals perspective, explosive top-line growth and exceptionally high margins for a company of Nvidia’s size—one that continues to benefit from long-term secular growth trends—reinforce the bullish case. Especially since valuations appear significantly de-risked when adjusted for these long-term growth expectations, I fully subscribe to this bullish outlook and rate the company as a Buy.
That said, given Nvidia’s historically volatile stock behavior, short-term downward swings are definitely possible. For those looking to go long ahead of earnings, an options-based trading strategy could be the best approach. Meanwhile, several top analysts, including Rick Schafer from Oppenheimer and C J Muse from Cantor Fitzgerald, favor bullish positions ahead of tomorrow’s earnings numbers.
As Nvidia gears up to report its quarterly results, it’s worth noting that in the previous quarter, the GPU powerhouse remained the most impressive performer among Big Tech. Nvidia posted a massive 78% year-over-year revenue growth, bringing in $39.3 billion, while its peers in the Magnificent 7 have struggled to hit even 20% growth.
Even if Nvidia’s surge has been driven almost entirely by explosive demand for its GPUs, adding $17 billion in revenue in just one year is a considerable achievement, especially for a company that sells hardware and has to navigate a far more complex logistics chain than software-based businesses.
What makes this even more impressive is that the top-line growth came with strong profitability. Despite supply chain headwinds, Nvidia successfully rolled out its new Blackwell architecture and still reported gross margins of 73% in its latest quarter. While that’s down from 76% in the same period last year and 74.6% last quarter, it’s still incredibly strong by any standard.
Naturally, when a company the size of Nvidia launches a next-gen chip architecture, especially one as advanced as Blackwell, there will be higher costs during the early production ramp. The good news is that this should be temporary. Nvidia’s management expects margins to rebound to the 75–76% range by the fiscal year’s end, reiterating that in their latest guidance.
