NVIDIA's Q2 earnings preview: AI boom powers NVIDIA's Q2 earnings outlook

When will NVIDIA report?

NVIDIA is set to release its quarter two (Q2) 2024 financial results on Thursday, 29 August at 6.20am (AEST) after the US market closes.

Key financial metrics

Q2 performance expectations

• Revenue: $28.544 billion
• Revenue growth: 211.31% year-on-year (YoY)
• Earnings per share (EPS): $0.64.

Highlights of the previous quarter

Expectations are high for NVIDIA's Q2 earnings, given the company’s leadership in several key growth markets. Over the past year, NVIDIA has experienced significant demand across various end markets, driven primarily by data centres and gaming.

In data centres, the adoption of AI and machine learning has propelled strong sales of NVIDIA’s specialised GPUs and networking products. Additionally, the company has benefited from the shift of enterprise workloads to the cloud. NVIDIA’s gaming segment continues to thrive, supported by the rise of eSports, game streaming services, and blockbuster game releases optimised for NVIDIA hardware.

What to expect

NVIDIA 's data centre segment, which includes sales of GPUs, networking gear, and AI software, is expected to grow further as major hyperscale customers like Amazon AWS, Microsoft Azure, and Alphabet GCP increasingly adopt NVIDIA chips for AI workloads.

Ongoing demand for NVIDIA’s latest GPUs for gaming and creative applications is anticipated to remain a key driver of revenue growth.

NVIDIA’s automotive computing platforms are gaining traction with more electric and autonomous vehicle manufacturers, further boosting demand for the company’s chips. Additionally, the company’s Omniverse 3D simulation platform has seen triple-digit customer growth over the past year, indicating potential future gains in enterprise software.

Analyst recommendations for NVIDIA

According to LSEG Data & Analytics, the consensus analyst rating for NVIDIA remains a strong ‘buy,’ with 19 strong buy, 33 buy, and 5 hold ratings as of 15 August 2024.

Analyst recommendations

Potential challenges to watch for

• Supply chain constraints: while improving, may still limit upside potential. If foundry and component shortages persist, NVIDIA might struggle to meet elevated demand, which could disappoint investors

• A slowdown in the PC market: due to challenging macroeconomic conditions may weaken performance in the graphics segment, dampening overall earnings growth

• Economic uncertainty: could also curb business spending if conditions deteriorate, disproportionately affecting NVIDIA's data centre and enterprise segments

• Increasing competition: from companies like AMD and Intel, which are also investing heavily in AI-focused chips, along with big tech and automotive firms developing their own AI chips, could potentially reduce demand for NVIDIA’s offerings

Despite these risks, Wall Street remains bullish on NVIDIA stock heading into the Q2 earnings report. Investors are focused on NVIDIA's long-term potential in AI, high-performance computing, autonomous vehicles, and the metaverse. Success in these areas is expected to drive share price momentum post-earnings.

NVIDIA technical analysis

NVIDIA's share price, up over 145% year-to-date despite a 35% drop from June to August, is currently testing the $118.04-to-$120.16 resistance zone, comprising the late June low and early August high.

Should this resistance zone be exceeded on a weekly chart closing basis on Friday, NVIDIA’s June all-time high of $140.76 could come back into focus.

NVIDIA weekly chart

This bullish outlook will remain valid as long as the early August low of $90.69 holds on a weekly chart closing basis.

For a medium-term top to form, NVIDIA’s share price would need to fall below the $90.69 early August low, potentially leading to further declines towards the 200-day simple moving average (SMA) at $83.14 and the April low at $75.61.

NVIDIA daily chart