NVIDIA Q2 Earnings Overview

Investors are optimistic that the company’s financial results will demonstrate record-breaking revenue, largely driven by surging demand for artificial intelligence (AI) applications and ongoing data center expansion.

The GPU powerhouse is expected to report revenue and earnings to more than doubled in the fiscal second quarter of 2025 to $28.84 billion^[1] and $14.95 billion, respectively.

Source: Visible Alpha

Nvidia AI Dominance
Nvidia’s strategic pivot from its gaming to data centers has resulted in its revenues skyrocketing.

The Big catalyst was AI, along with the boom of large language models (LLMs) like OpenAI’s ChatGPT, Twitter’s xAI, and many more that require Nvidia’s Chips to power large data centers, essentially creating AI Factories.

The data center’s quarterly revenue hit a record of $22.6 billion in Q1 FY 2025 and is projected to eclipse $30 billion by the fourth quarter.

Source: Nvidia Reports, S&P Global

The data center segment drives revenue growth through licensing deals and subscription-based models, which enhances operational efficiency and supports profit margin expansion as Nvidia broadens its clientele.

A testament to that is Nvidia’s gross profit margin expansion, which is expected to reach 75.5%, a significant increase from the 56.9% reported in Q1 2023.

Nvidia’s past and future

NVIDIA Stock is up over 3000% in the last 5 years, its competitor AMD is up a fraction of that, and Intel is down 54% over the same period.

The GPU leader stock started going meteoric after the AI wave started with the “AI” and “ChatGPT” search explosion in late 2022.

Source: TradingView & Google Trends | Data As of 26 August, 2024

Is Nvidia a buy?

The combination of elevated expectations and delay of the upcoming Blackwell AI GPUs due to design flaws means the upcoming earnings release will be critical for Nvidia shareholders.

The continued demand for more and more AI power across industries is expected to increase the demand for Nvidia’s GPUs.

With a P/E ratio 76^[2], Nvidia’s stock is priced for significant future growth. This high P/E suggests investors expect strong earnings growth driven by Nvidia’s AI and data center advancements.

Investors can long Nvidia using our 2x NVIDIA,3x NVIDIA.

Alternatively, traders can short Nvidia using our -1x NVIDIA, -3x NVIDIA.

Footnotes:

Visible Alpha
Koyfin

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