NVIDIA reports quarterly earnings next week, with Wall Street expecting continued explosive growth from AI infrastructure spending. Here's what investors should watch for and how the stock might react.
Consensus Estimates
Analysts expect revenue of $35 billion (up 110% year-over-year) and EPS of $0.85 (up 125%). Data center revenue is forecasted at $31 billion, representing 88% of total revenue. Gaming is expected at $2.8 billion, and professional visualization at $420 million. The company has beaten estimates by an average of 12% over the past four quarters.
Key Metrics to Watch
Data center revenue growth and forward guidance are the only numbers that truly matter. Investors will scrutinize demand for Hopper H100/H200 chips and commentary on Blackwell GB200 availability. Gross margins should remain near 75%, with any decline signaling competitive pressure. Customer concentration remains a concern with hyperscalers representing 50%+ of revenue.
Blackwell Ramp
The GB200 Blackwell system launched in Q4 2025 to overwhelming demand. Production ramp is supply-constrained by CoWoS packaging capacity from TSMC. Management guidance on Blackwell revenue contribution in fiscal 2027 will determine whether current growth rates are sustainable. Some analysts model Blackwell driving $60+ billion in data center revenue within 18 months.
Competition Concerns
AMD's MI300 series has gained some share in AI training workloads, though NVIDIA maintains 90%+ market share. Custom chips from hyperscalers (Google TPU, Amazon Trainium, Microsoft Maia) represent a long-term threat, though switching costs remain very high due to CUDA's software moat. Management commentary on competitive dynamics will be closely analyzed.
Valuation and Stock Reaction
NVIDIA trades at 68x forward earnings, pricing in continued hypergrowth. The stock typically gains 8-12% on earnings beats accompanied by strong guidance. However, any disappointment or cautious commentary could trigger 10-15% declines given elevated expectations. Options markets are pricing a 9% move (up or down) following the report.
Bull Case Scenario
Revenue beats estimates by 10%+, data center growth accelerates to 125%+, Blackwell demand described as unprecedented, gross margins expand, and guidance is raised materially. Stock could rally to $1,050+ on this outcome, with analysts raising price targets.
Bear Case Scenario
Revenue meets but doesn't beat, data center growth decelerates below 100%, Blackwell ramp faces delays, margin pressure emerges, or guidance disappoints. Stock could decline to $800-850, with concerns about peak AI spending emerging.
Most Likely Outcome
We expect NVIDIA to beat estimates by 5-8% with solid guidance, leading to a 4-6% post-earnings gain. The AI infrastructure buildout remains in early innings, supporting continued strong demand. Management will likely emphasize the multi-year nature of the AI investment cycle to justify current valuations.
Conclusion
NVIDIA earnings will provide crucial insight into AI spending trends. While the stock's valuation is stretched, momentum remains powerful as long as growth continues at current rates. For existing shareholders, hold through earnings. For potential buyers, wait for post-earnings clarity before establishing positions.
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