Nvidia (NASDAQ: NVDA) has been 2024’s most influential stock. Rising artificial intelligence (AI) demand spurred enormous sales and earnings growth for the corporate, and the business momentum translated to incredible valuation gains.

The processing leader’s share price is up 161% across this yr’s trading alone, and its incredible performance has been a bullish catalyst for the market at large and other individual players within the AI space. Now, Nvidia stock is on the verge of its next big test.

After the market closes on Wednesday, Aug. 28, the corporate will publish results for the second quarter of its 2025 fiscal yr (which ended July 28). Management will even host a conference call to present investors further insight into the business and its outlook.

The earnings release will likely be one in all this yr’s most vital stock market events, and anticipation on Wall Street is running high. There’s loads of speculation on whether Nvidia will beat earnings expectations, and I’m predicting that the AI giant will comfortably beat most targets. But buckle up, because this one could get wild.

Nvidia looks poised to crush sales and earnings targets

In its fiscal 2025 first quarter update, Nvidia management guided for roughly $28 billion in sales within the second quarter. If the corporate hits that concentrate on, it will mean delivering annual sales growth of 107%. Management also expects Nvidia’s gross margin to grow to 74.8%. Those numbers are nothing to sneeze at.

Wall Street is much more optimistic, with the typical analyst estimate calling for the AI frontrunner to deliver sales of $28.6 billion within the period. So far, the corporate has been constructing a powerful streak of performance beats. Take a take a look at the table below, which tracks Nvidia’s revenue against Wall Street’s expectations over the corporate’s last 4 reported quarters.

Data sources: Nvidia and CNBC.

With the corporate posting improbable margins, sales beats have also meant that the corporate’s earnings have crushed Wall Street’s expectations. Across the last yr, the corporate’s quarterly non-GAAP (adjusted) earnings beat the midpoint Wall Street goal by a median of 17.3%.

Tech industry capex is flashing signals

There is a excellent probability that Nvidia will manage to beat its own targets and the typical Wall Street estimates with its upcoming quarterly report. Here’s why.

Story continues

With its last quarterly report, Microsoft announced capital expenditures (capex) of $19 billion — with nearly the entire spending going to improving the corporate’s cloud and AI infrastructure. Capex was up 35% from the previous quarter, and management also announced that spending is poised to proceed climbing over the subsequent yr. Microsoft is widely believed to be Nvidia’s largest customer, and increased spending on AI infrastructure is a transparent bullish indicator.

The software giant wasn’t the just one to deliver encouraging capex news recently. Meta Platforms, one other big Nvidia customer, also raised its capital-spending guidance range with the second-quarter results it published at the top of last month.

On the whole, the sentiment amongst many leading tech firms appears to be that it’s higher to speculate heavily in artificial intelligence straight away than to risk being left behind or playing catch-up with competitors. Together with promising capex data from technology giants, that bodes well for Nvidia — and I feel the corporate will beat top- and bottom-line expectations in Q2.

But there is a catch.

Nvidia stock needs greater than strong Q2 results for a post-earnings surge

While the typical Wall Street goal calls for Nvidia to report revenue of $28.6 billion for the second quarter, some analysts have set the goal significantly higher. For instance, HSBC expects the business to report $30 billion in revenue for the period.

Beating the typical Wall Street goal is commonly enough to trigger bullish valuation momentum for an organization, but that may not all the time the case. Hot stocks specifically are sometimes held to higher standards — with investors in search of the business to deliver results that match or exceed elevated expectations. It is also value noting that Wall Street analysts have gotten more accurate in modeling the corporate’s performance over the past yr of reporting, with Nvidia’s quarterly sales beat going from 20.4% in last yr’s second quarter to five.6% on this yr’s first quarter.

Even when Nvidia manages to far exceed the typical Wall Street targets, there are other catalysts that could lead on to volatile trading after earnings. Investors will even have the corporate’s guidance for the present quarter and future roadmap under the microscope, and reports have emerged that the AI leader could also be delaying the discharge of its next-generation Blackwell processors. Depending on what Blackwell news Nvidia has to share, the stock could see big moves in either direction.

So even with signs that the AI luminary will deliver strong Q2 results, investors should understand the stage might be set for post-earnings valuation volatility. Fairly than attempting to time short-term buying and selling moves around what the corporate’s share price will do soon after earnings, it makes more sense to approach an investment in Nvidia with the corporate’s long-term outlook in mind. Things generally proceed to look quite promising on that front.

Do you have to invest $1,000 in Nvidia straight away?

Before you purchase stock in Nvidia, consider this:

The Motley Idiot Stock Advisor analyst team just identified what they consider are the 10 best stocks for investors to purchase now… and Nvidia wasn’t one in all them. The ten stocks that made the cut could produce monster returns in the approaching years.

Consider when Nvidia made this list on April 15, 2005… for those who invested $1,000 on the time of our advice, you’d have $792,725!*

Stock Advisor provides investors with an easy-to-follow blueprint for fulfillment, including guidance on constructing a portfolio, regular updates from analysts, and two latest stock picks every month. The Stock Advisor service has greater than quadrupled the return of S&P 500 since 2002*.

See the ten stocks »

*Stock Advisor returns as of August 26, 2024

HSBC Holdings is an promoting partner of The Ascent, a Motley Idiot company. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Idiot’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Idiot has positions in and recommends Meta Platforms, Microsoft, and Nvidia. The Motley Idiot recommends HSBC Holdings and recommends the next options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure policy.

Prediction: Nvidia Will Crush Wall Street Expectations on Aug. 28 — but There is a Catch for the AI Stock was originally published by The Motley Idiot