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Why Is Nvidia (NVDA) Up 26% Since Last Earnings Report?
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It has been about a month since the last earnings report for Nvidia (NVDA - Free Report) . Shares have added about 26% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nvidia due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NVIDIA Q1 Earnings Top Estimates, Revenues Rise Y/Y
NVIDIA reported first-quarter fiscal 2025 earnings of $6.12 per share, which beat the Zacks Consensus Estimate by 11.48% and increased 19% sequentially. Notably, NVDA posted earnings of $1.09 per share in the year-ago quarter.
Revenues jumped 262% year over year to $26.04 billion and beat the Zacks Consensus Estimate by 7.02%. On a sequential basis, revenues increased 18%.
NVIDIA is riding on a strong and innovative portfolio, with the growing adoption of its GPUs. It benefits from a strong partner base that includes the likes of TSMC, Synopsys, AWS, Alphabet, Microsoft, Oracle, and Johnson & Johnson MedTech.
NVIDIA also announced a ten-for-one forward stock split of its issued common stock and raised the quarterly cash dividend by 150%.
Segment Details
NVIDIA reports revenues under two segments — Graphics, and Compute & Networking.
Graphics accounted for 13% of fiscal first-quarter revenues. The segment’s top line climbed 23.3% year over year, while decreasing 20% sequentially to $3.37 billion. The figure lagged the consensus mark by 32.51%.
Compute & Networking represented 87% of fiscal first-quarter revenues. Revenues soared 408.4% year over year and 27% sequentially to $22.68 billion. The figure beat the Zacks Consensus Estimate by 19.26%
Based on the market platform, Gaming revenues increased 478% year over year but declined 8% sequentially at $2.65 billion beating the Zacks Consensus estimate by 0.72%.
NVIDIA expanded its collaboration with Alphabet by offering support for Google’s Gemma for ChatRTX, which brings chatbot capabilities to RTX-powered Windows PCs and workstations.
Revenues from Data Center jumped 427% year over year and 23% sequentially to $22.56 billion. The figure beat the consensus mark by 9.09%.
Data Center compute revenues were $19.4 billion, up 478% year over year and 29% sequentially. Higher shipments of the NVIDIA Hopper GPU computing platform used for training and inferencing with large language models, recommendation engines, and generative AI applications benefited top-line growth.
Networking revenues were $3.2 billion, up 242% year over year on strong growth of InfiniBand end-to-end solutions. However, revenues declined 5% sequentially due to the timing of supply.
Strong sequential Data Center growth was driven by all customer types, led by Enterprise and Consumer Internet companies. Large cloud providers continued to drive strong growth as they deployed and ramped NVIDIA AI infrastructure at scale, representing mid-40% of NVIDIA’s Data Center revenues.
In the reported quarter, NVDA announced that TSMC and Synopsys would go into production with NVIDIA cuLitho to accelerate computational lithography. It also expanded collaborations with AWS, Alphabet’s Google Cloud, Microsoft and Oracle to accelerate generative AI innovation.
Professional Visualization revenues increased 45% year over year but declined 8% sequentially to $427 million, lagging the Zacks Consensus estimate by 13.33%.
Automotive sales in the reported quarter totaled $329 million, up 11% on a year-over-year basis and 17% sequentially. The figure beat the Zacks Consensus Estimate by 9.78%.
NVIDIA Drive Thor solution was adopted by BYD, XPENG, GAC’s AION Hyper, Nuro and others in the reported quarter. Lucid and IM Motors are using the NVIDIA DRIVE Orin platform for vehicle models targeting the European market.
OEM and Other revenues moved up 1% year over year but declined 13% sequentially to $78 million. The figure missed the consensus mark by 15.39%.
Expanding Portfolio Aids Prospects
In the fiscal first quarter, NVIDIA launched the Blackwell platform targeted for AI computing at a trillion-parameter scale and the Blackwell-powered DGX SuperPOD for Generative AI supercomputing.
It announced NVIDIA Quantum and NVIDIA Spectrum X800 series switches for InfiniBand and Ethernet, respectively, optimized for trillion-parameter GPU computing and AI infrastructure.
Moreover, the company launched NVIDIA AI Enterprise 5.0 with NVIDIA NIM inference microservices to speed enterprise app development.
For the gaming domain, NVIDIA launched AI gaming technologies for NVIDIA ACE and Neural Graphics. Moreover, it unveiled AI performance optimizations and integrations for Windows to deliver maximum performance on NVIDIA GeForce RTX AI PCs and workstations.
For the Professional Visualization domain, it launched NVIDIA RTX 500 and 1000 professional Ada generation laptop GPUs for AI-enhanced workflows, NVIDIA RTX A400 and A1000 GPUs for desktop workstations and NVIDIA Omniverse Cloud APIs.
Operating Details
NVIDIA’s non-GAAP gross margin increased to 78.9% from 66.8% in the year-ago quarter and 76.7% from the previous quarter, mainly driven by higher Data Center sales.
Non-GAAP operating expenses increased 43% year over year and 13.2% sequentially to $2.50 billion. The increase was due to higher compensations and related benefits.
However, as a percentage of total revenues, non-GAAP operating expenses declined to 9.6% from 24.3% in the year-ago quarter and 30.7% in the previous quarter.
The non-GAAP operating income was $18.06 billion compared with $3.05 billion in the year-ago quarter. Sequentially, the figure jumped 22.4%.
Balance Sheet and Cash Flow
As of Apr 28, 2024, NVDA’s cash, cash equivalents and marketable securities were $31.44 billion, up from $25.98 billion as of Jan 28, 2024.
As of Apr 28, 2024, the total long-term debt was $8.46 billion, unchanged sequentially.
NVIDIA generated $15.4 billion in operating cash flow, up from the previous quarter’s $11.5 billion.
The company ended the fiscal first quarter with a free cash flow of $14.94 billion.
In the fiscal first quarter, it returned $7.8 billion to shareholders through dividend payouts and share repurchases.
Guidance
For the second quarter of fiscal 2025, NVIDIA anticipates revenues of $28 billion (+/-2%), higher than the Zacks Consensus Estimate of $26.24 billion.
The non-GAAP gross margin is projected at 75.5% (+/-50 bps). Non-GAAP operating expenses are estimated at $2.8 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 8.42% due to these changes.
VGM Scores
At this time, Nvidia has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nvidia has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Nvidia (NVDA) Up 26% Since Last Earnings Report?
It has been about a month since the last earnings report for Nvidia (NVDA - Free Report) . Shares have added about 26% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Nvidia due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NVIDIA Q1 Earnings Top Estimates, Revenues Rise Y/Y
NVIDIA reported first-quarter fiscal 2025 earnings of $6.12 per share, which beat the Zacks Consensus Estimate by 11.48% and increased 19% sequentially. Notably, NVDA posted earnings of $1.09 per share in the year-ago quarter.
Revenues jumped 262% year over year to $26.04 billion and beat the Zacks Consensus Estimate by 7.02%. On a sequential basis, revenues increased 18%.
NVIDIA is riding on a strong and innovative portfolio, with the growing adoption of its GPUs. It benefits from a strong partner base that includes the likes of TSMC, Synopsys, AWS, Alphabet, Microsoft, Oracle, and Johnson & Johnson MedTech.
NVIDIA also announced a ten-for-one forward stock split of its issued common stock and raised the quarterly cash dividend by 150%.
Segment Details
NVIDIA reports revenues under two segments — Graphics, and Compute & Networking.
Graphics accounted for 13% of fiscal first-quarter revenues. The segment’s top line climbed 23.3% year over year, while decreasing 20% sequentially to $3.37 billion. The figure lagged the consensus mark by 32.51%.
Compute & Networking represented 87% of fiscal first-quarter revenues. Revenues soared 408.4% year over year and 27% sequentially to $22.68 billion. The figure beat the Zacks Consensus Estimate by 19.26%
Based on the market platform, Gaming revenues increased 478% year over year but declined 8% sequentially at $2.65 billion beating the Zacks Consensus estimate by 0.72%.
NVIDIA expanded its collaboration with Alphabet by offering support for Google’s Gemma for ChatRTX, which brings chatbot capabilities to RTX-powered Windows PCs and workstations.
Revenues from Data Center jumped 427% year over year and 23% sequentially to $22.56 billion. The figure beat the consensus mark by 9.09%.
Data Center compute revenues were $19.4 billion, up 478% year over year and 29% sequentially. Higher shipments of the NVIDIA Hopper GPU computing platform used for training and inferencing with large language models, recommendation engines, and generative AI applications benefited top-line growth.
Networking revenues were $3.2 billion, up 242% year over year on strong growth of InfiniBand end-to-end solutions. However, revenues declined 5% sequentially due to the timing of supply.
Strong sequential Data Center growth was driven by all customer types, led by Enterprise and Consumer Internet companies. Large cloud providers continued to drive strong growth as they deployed and ramped NVIDIA AI infrastructure at scale, representing mid-40% of NVIDIA’s Data Center revenues.
In the reported quarter, NVDA announced that TSMC and Synopsys would go into production with NVIDIA cuLitho to accelerate computational lithography. It also expanded collaborations with AWS, Alphabet’s Google Cloud, Microsoft and Oracle to accelerate generative AI innovation.
Professional Visualization revenues increased 45% year over year but declined 8% sequentially to $427 million, lagging the Zacks Consensus estimate by 13.33%.
Automotive sales in the reported quarter totaled $329 million, up 11% on a year-over-year basis and 17% sequentially. The figure beat the Zacks Consensus Estimate by 9.78%.
NVIDIA Drive Thor solution was adopted by BYD, XPENG, GAC’s AION Hyper, Nuro and others in the reported quarter. Lucid and IM Motors are using the NVIDIA DRIVE Orin platform for vehicle models targeting the European market.
OEM and Other revenues moved up 1% year over year but declined 13% sequentially to $78 million. The figure missed the consensus mark by 15.39%.
Expanding Portfolio Aids Prospects
In the fiscal first quarter, NVIDIA launched the Blackwell platform targeted for AI computing at a trillion-parameter scale and the Blackwell-powered DGX SuperPOD for Generative AI supercomputing.
It announced NVIDIA Quantum and NVIDIA Spectrum X800 series switches for InfiniBand and Ethernet, respectively, optimized for trillion-parameter GPU computing and AI infrastructure.
Moreover, the company launched NVIDIA AI Enterprise 5.0 with NVIDIA NIM inference microservices to speed enterprise app development.
For the gaming domain, NVIDIA launched AI gaming technologies for NVIDIA ACE and Neural Graphics. Moreover, it unveiled AI performance optimizations and integrations for Windows to deliver maximum performance on NVIDIA GeForce RTX AI PCs and workstations.
For the Professional Visualization domain, it launched NVIDIA RTX 500 and 1000 professional Ada generation laptop GPUs for AI-enhanced workflows, NVIDIA RTX A400 and A1000 GPUs for desktop workstations and NVIDIA Omniverse Cloud APIs.
Operating Details
NVIDIA’s non-GAAP gross margin increased to 78.9% from 66.8% in the year-ago quarter and 76.7% from the previous quarter, mainly driven by higher Data Center sales.
Non-GAAP operating expenses increased 43% year over year and 13.2% sequentially to $2.50 billion. The increase was due to higher compensations and related benefits.
However, as a percentage of total revenues, non-GAAP operating expenses declined to 9.6% from 24.3% in the year-ago quarter and 30.7% in the previous quarter.
The non-GAAP operating income was $18.06 billion compared with $3.05 billion in the year-ago quarter. Sequentially, the figure jumped 22.4%.
Balance Sheet and Cash Flow
As of Apr 28, 2024, NVDA’s cash, cash equivalents and marketable securities were $31.44 billion, up from $25.98 billion as of Jan 28, 2024.
As of Apr 28, 2024, the total long-term debt was $8.46 billion, unchanged sequentially.
NVIDIA generated $15.4 billion in operating cash flow, up from the previous quarter’s $11.5 billion.
The company ended the fiscal first quarter with a free cash flow of $14.94 billion.
In the fiscal first quarter, it returned $7.8 billion to shareholders through dividend payouts and share repurchases.
Guidance
For the second quarter of fiscal 2025, NVIDIA anticipates revenues of $28 billion (+/-2%), higher than the Zacks Consensus Estimate of $26.24 billion.
The non-GAAP gross margin is projected at 75.5% (+/-50 bps). Non-GAAP operating expenses are estimated at $2.8 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 8.42% due to these changes.
VGM Scores
At this time, Nvidia has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Nvidia has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.