Nvidia’s (NASDAQ: NVDA) steep sell-off has nearly run its course. The stock plunged 23.5% at one point, causing considerable angst for some investors. Nonetheless, Nvidia has been on a roll in August, jumping almost 25%.
This momentum will end anytime soon, in my opinion. As a substitute, I predict that Nvidia stock will soar after Aug. 28. And I believe the surge might be attributable to three key aspects.
1. Blowout Q2 numbers
In Nvidia’s fiscal 2025 first quarter, the corporate said it expected Q2 revenue of “$28.0 billion, plus or minus 2%.” Wall Street analysts surveyed by LSEG consider Nvidia sandbagged a bit. Their average Q2 revenue estimate is $28.6 billion.
I predict Nvidia will beat its own Q2 outlook and top Wall Street’s expectations when it broadcasts its results on Aug. 28. I also think this can flow right down to the underside line, with the corporate exceeding the common analysts’ adjusted earnings estimate of $0.64 per share.
Why am I so optimistic? Each Nvidia and Wall Street have been too pessimistic in regards to the demand for the corporate’s graphics processing units (GPUs).
In Nvidia’s fiscal 2024 Q4 update, management projected fiscal 2025 Q1 revenue of $24 billion, again giving a “plus or minus 2%” caveat. The corporate’s actual Q1 revenue was $26 billion — 8.3% higher than its outlook. Nvidia beat the consensus Q1 earnings estimate by 9.8%. I won’t be surprised if there are similar outcomes in the corporate’s Q2 results.
2. Stellar guidance
On a related note, I search for Nvidia to once more provide stellar guidance for the subsequent quarter in its Q2 update. I’m much more confident about this prediction than I’m that the corporate will deliver blowout Q2 numbers.
4 reasons explain my boldness: Alphabet, Amazon, Microsoft, and Meta Platforms. All of those huge Nvidia customers indicated of their latest quarterly updates that their capital expenditures will likely increase in the approaching quarters to expand their artificial intelligence (AI) infrastructure.
One comment especially stood out to me within the tech giants’ recent earnings calls. Alphabet CEO Sundar Pichai said, “[T]he risk of under-investing is dramatically greater than the danger of over-investing for us here.” That needs to be music to the ears of Nvidia shareholders. And if Alphabet sees this risk of under-investing, you’ll be able to bet that Amazon, Microsoft, and Meta do too.
3. Clarity on the Blackwell launch
Perhaps the darkest cloud hovering over Nvidia in recent weeks is the priority that the corporate’s launch of its recent Blackwell GPUs might be significantly delayed. Any pushback in shipping these recent chips will mean Nvidia’s revenue won’t grow as quickly as originally expected.
I believe the largest issue for investors here is the sheer uncertainty. Some may very well be afraid of a far more serious delay than has been speculated to date. However the cure for uncertainty is clarity, something I expect Nvidia will provide in its Q2 conference call.
Am I predicting there won’t be any delay in shipping Blackwell chips? No. Nonetheless, I believe that Nvidia will seek to calm concerns to the perfect of its ability (and possibly hint quite a bit in regards to the pent-up demand for the brand new architecture). Once investors digest the news (whatever it may be), they’ll quickly adjust their expectations. Most significantly, any delay will only be temporary.
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Prediction: Nvidia Stock Will Soar After Aug. 28 Due to These 3 Key Aspects was originally published by The Motley Idiot