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Can AI Stalwart Nvidia Deliver Back-To-Back Hit? Q3 Earnings Preview

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AI stalwart Nvidia Corp. (NASDAQ:NVDA) set a high bar for itself when it reported breathtaking results for its June quarter. The Santa Clara, California-based company now has the tall task of outperforming itself when it delivers its third-quarter report after the market closes on Tuesday.

What Wall Street Is Bracing For: Analysts, on average, expect Nvidia to report earnings per share of $3.36 on revenue of $16.12 billion, according to Benzinga Pro data. The Street forecasts suggest the company’s earnings per share will likely grow about 480% year-over-year and 24.44% sequentially. The consensus revenue estimate factors in year-over-year and quarter-over-quarter growth of 172% and 22.6%, respectively.

Here’s how the company fared in the preceding quarter and the year-ago quarter:

Q2’24 Y-o-Y Growth Q-o-Q Growth Q3’23 Y-o-Y Growth Q-o-Q Growth
EPS (non-GAAP) $2.70 +429% +148% 58 cents (-50%) +14%
Revenue $13.51B +101% +88% $5.93B (-17%) (-12%)

When Nvidia reported its June quarter results in late August, it guided third-quarter revenue to $16 billion, plus or minus 2%.

The company guided non-GAAP gross margin to 72.5%, plus or minus 50 basis points. This would mean an improvement from the second quarter’s 71.2% and the year-ago quarter’s 56.1%. Nvidia’s CFO, Colette Kress, attributed the second-quarter margin improvement to higher data center growth.

Raymond James analyst Srini Pajjuri said he expects another strong quarter from Nvidia, with a likely 5%-10% revenue beat.

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Expectations For Nvidia’s Key Segments: Nvidia’s key business segments are Data Center, Gaming, Professional Visualization, and Auto. The Data Center Segment was the standout performer in the second quarter, thanks to robust sales of high-performance chips to cloud service providers and large consumer internet companies. The strong demand came on the back of the development of large language models and generative AI.

Oppenheimer analyst Rick Schafer models 22% sequential growth in Data Centers in the third quarter, aided by strong demand for Nvidia accelerators.

The Gaming segment has seen an upward revenue trajectory after bottoming at $1.57 billion in the third quarter of 2023.

Q2’24 Y-o-Y Growth Q-o-Q Growth Q3’23 Y-o-Y Growth Q-o-Q Growth

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